Steemit Crypto Academy Contest / S14W2 - Volatility in cryptocurrencies

*Since the inception of cryptocurrency, It has gained global attraction and the necessity to comprehend the nature of crypto volatility has grown as volatility enhances the survival of crypto.*

Various factors contribute to the fluctuation in prices of cryptocurrency, and they include government regulations, investor and user sentiments, demand and supply as well and media hype. Hence cryptocurrency may be quite unpredictable.

However, due to the decentralized nature and global adoption of cryptocurrencies, they reduce risk and create new avenues for international trade. This brings us to something most people tend to overlook about cryptocurrencies, which is that nothing is backing up its value.

VOLATILITY - ADVANTAGES AND DISADVANTAGES

Even as volatility causes uncertainty and fear of missing out (FOMO) or fear of participating at all, high volatility is attractive to some cryptocurrency investors since it opens up the chance of large gains.

Meanwhile, for investors who do not have high-risk tolerance, there are ways to lessen the negative effects of volatility which as dollar-cost averaging.

Dollar-cost-averaging, also known as DCA has to do with buying smaller amounts of assets regularly over some time. It is a long-term investment approach. An example is investing $1000 in STEEM every month instead of $2000 at once. This can span over months or even years.

One might say it is the same thing, but the advantage DCA has is that you will not have difficulty timing the market and the possibility of inadvertently squandering all of your assets to invest "a lump sum" at a high. It is a very effective way of investing.

HOW TO MEASURE MARKET VOLATILITY

You might be thinking, how can I track the volatility of a particular crypto asset? Over the years, various indicators and trackers have been made which have proven useful in tracking the volatility.

One of them is the Average True Range (ATR) indicator which tracks the volatility over a specified length of time. Depending on how noticeable price swings are for an asset, it goes upward or downward; a higher ATR number denotes more market volatility and a lower ATR denotes less market volatility.

Another popular one is Standard Deviation which calculates the degree of price dispersion for a security. Traders use Bollinger Bands to analyze standard deviation. One can use the beta or standard deviation to calculate volatility.

The standard deviation calculates the degree of price dispersion for a certain security. The volatility of a securities concerning the market as a whole is determined by its beta. One may compute beta by regression analysis.

This gauge shows a summary of the technical analysis in real-time for a chosen time frame. The most widely used technical indicators, like as moving averages, oscillators, and pivots, are the foundation of the Steem/TetherUS report.

The volatility in the last month of the STEEM/USDT chart has been relatively lower than high.
However, this does not dispute the fact that cryptocurrency is a long-term investment as they have outperformed most financial markets in the past years.

Take good investment measures while preparing for the next Bull Run. Follow for more informative crypto content.