Cryptocurrency and volatility: negative dilemma

Cryptocurrencies are changeable – you can't ignore them. Ironically, this trait is both the reason they are so successful and a huge obstacle to their adoption by the general public. After all, no one likes to be on the wrong side of volatility. But what is becoming increasingly clear is that while cryptocurrencies sometimes experience a significant decline, the global market is consistently recovering stronger than ever. However, not many people take advantage of this growth – either because they sold too soon or because they were kicked out of their positions. At Bumper Finance, the highly innovative DeFi price protection protocol, they want to put an end to this problem. But before we dive into what their product can do for you, let's take a look at the problem in question. The Volatility Problem When it comes to volatility, cryptocurrencies are in a different class than most other financial instruments such as stocks, commodities and fiat currencies. While the average 30-day gold volatility is relatively vanilla at 0.35%, the 30-day Bitcoin (BTC) volatility is at a greater order and currently stands at 2.9%. The 30-day volatility is at least 10%. There are several main reasons why cryptocurrencies are so volatile. The first is less liquid than other traditional markets. This could objectively mean that small market orders can have a significant effect on the price, potentially causing a series of stop orders that result in a typical price move. Their accessibility also means that they are bought and sold by inexperienced investors who may be more prone to irregular stocks when the market turns sharply. Now, this fluctuation is great for short-term traders who want to profit from rapid changes in the value of a cryptocurrency. However, it's much less fun for long-term officers who fear liquidating their positions when they're full.

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