Looking for a Pattern in the Volatility of Cryptocurrency

Volatility

Since we're talking about cryptocurrency, it is important to realize that the volatility is unique. In other investing markets the percentage of losses and gains aren't as violent as they are in the crypto market. In the Foreign Exchange Market (Forex) you exchange foreign fiat currencies against each other. They have such a low volatility that most charts show changes in units called pips. A pip is a standardized unit and is the smallest amount by which a currency quote can change, which is usually $0.0001 for U.S.-dollar related currency pairs, which is more commonly referred to as 1/100th of 1%, or one basis point.

The stock market is another popular means of trading. When you're trading daily on the S&P or Dow exchange, daily gains and losses of 10% are usually always accompanied with bad or good news. For a large company if a CEO is part of a scandal, it can cause a huge drop in price due to investor confidence. Likewise, company acquisitions and mergers can raise the price. These gains and losses can be substantial, but they are nothing like the dips we see on crypto exchanges. Even when a singular stock does good, the overall market still only changes by a few percentage points.

I'm certain an infographic isn't needed for the cryptocurrency market. Anyone that is even remotely familiar with cryptocurrency knows that 20-30% gains and losses are common. The high percentage losses are always talked about much more than the high percentage gains. This is because when things go wrong you get worried. You get stressed out and start looking for reasons why.

Is it a cycle?

It's difficult to tell. I've been in cryptocurrency for a couple years now and real awareness didn't come until March or April of 2017. This is when I started to hear strangers talk about crypto other than just Bitcoin. This is when the Ethereum ICOs started taking off. This is when the market started gaining traction.

People, myself included, made our first ridiculous percentage returns at this time. We watched our $10 Ethereum coins turn to $50 coins, then $100. By the time three very quick months went by, our $10 coins that we bought were now worth $400 each. Bitcoin was losing it's dominance as the only cryptocurrency that peoople were interested in. This is when a massive sell off happened. In July of last year many of our trusted coins lost half of their value compared to Bitcoin and we were left scratching our heads. Many new coins were starting to gain attention and with all of the new the ICOs coupled with the fall of the early crypto successes, Bitcoin started gaining it's dominance back.

Then in October we had another major uptrend. We went from a total market cap of just over $100 Billion to over $800 Billion. This kind of increase is just not healthy, and a major correction was inevitable. You simply cannot expect everyone to sit on their huge gains and not cash out. A lot of people made a lot of money, but some of us just continue to hold.

This recent large increase is about six months after the last big rise we had. Both took place for about three months. If the timing holds true, sometime within the next week or two we will start to see a gradual increase back to a growing market, but the real gains will be had again in April-June.

It will be interesting to see but I personally just can't fathom another increase in the magnitude that we have had last time. This would take our market cap well over $1 Trillion and our favorite coins 10x the value they are right now.

I guess we'll have to wait and see.