Understanding Volatility in Blockchain Tokens
Regardless of whether you’re someone that’s only heard of cryptocurrency on the news, or an expert blockchain enthusiast, you most likely are aware that cryptocurrency (as well as blockchain tokens in general) are highly volatile assets. When one compares cryptocurrency or blockchain assets to traditionally analyzed assets, such as stocks, the level of volatility seems frightening: it’s by no means uncommon to see even top-25 cryptocurrencies rise or fall 33% in one day, or 50% in one week. Percentiles like those would cause mass hysteria in the stock market.
However, the comparison of blockchain assets to traditional assets such as stocks is likely a poor frame of reference. While many of the same “tools” are used, such as candlesticks, technical analysis, and dollar cost averaging, these are simply relative to analytics; they do not remove the reality that comparing stocks to blockchain assets is like comparing apples and oranges. A good analogy would be using a scale to weigh yourself and weigh your pet: you might be using the same tool, but you’re simply measuring a different species.
So what makes cryptocurrency and blockchain assets so volatile?
