Cryptocurrency Volatility Report — April 2019
Data and Insights into Trends and Price Action of Top Cryptocurrencies by Market Cap
Bitcoin Price Action indicates that the market is mildly bullish entering May 2019. Bitcoin Dominance was upward of 52% for most of April 2019. The Crypto Market has been in a constant state of flux for the past few weeks and the volatility for Top 30 Cryptocurrencies is higher and more pronounced than Q3 and Q4 of 2018.
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Volatility of Stable Coins
Stablecoin volatility might sound unusual, but it’s a daily occurrence in the crypto market. We witnessed an extreme example of this when Tether briefly lost its peg to the U.S. Dollar and was trading below $0.86 on some crypto exchanges.
Stablecoins like Tether (USDT), True USD (TUSD), DAI and Paxos Standard Token (PAX) showed noteworthy volatility movements that were unrelated to Bitcoin Price Action, indicating that the market is growing at large and beyond Bitcoin Dominance.
On reading this Price Action Graph, we deduce that DAI witnessed the highest price action followed by PAX, TUSD, and USDT. The trend in these stablecoins indicates that PAX has been the most stable with the lowest volatility and parking your funds in PAX would give stable returns at the end of the 30 day period.
On investing $10000 in PAX on 03 April 2019, HODLers can expect a return of $10050 on 2 May 2019. This is a gain of $50 on a portfolio $10000 over a period of 30 days, staying invested in a stable coin.
In Week 1 of April 2019, the volatility of stable coins was nearly 0.08 and increased to 0.01 midweek in Week 2.
Based on the price trends data for top Stablecoins (download it here), we can conclude that the trend in stablecoins is moving upward.
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Volatility of Binance Coin
Is BNB the next BTC?
Binance Coin had a volatility of 2.2 in April 2019, and was ranked at 7 among Top 30 cryptos by Market Cap has been leading the Price Action and altcoins followed its trend all through April 2019.
Download the full report for BNB here.
Comparing month long price action for BNB and altcoins suggests the conclusion that BNB is well on its way to being the next BTC and governing altcoin price action.
Insights from BNB Price Action and Volatility
- BNB soared by 300% in the past one year and is now ranked 7th among Top Cryptocurrencies by Market Cap
- BNB is well on its way to being the next BTC with altcoins following its price action trends
- BNB is the Top Choice for Long Term ROI for HODLers and inactive traders or investors
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Volatility of Bitcoin and Top Altcoins
Bitcoin soared nearly 25% in the past 3 weeks. Bitcoin price was above $5300 for the last 2 weeks of April 2019. Bitcoin has been breaking support and surpassing the price action that we have observed in the last couple of quarters alone.
Market uncertainty and Bitcoin’s unprecedented bullish moves have left crypto traders pondering the direction of the trend. Based on the April 2019 trend we can conclude that the bear market is well behind us and crypto winter is over. But looking at Altcoin promises, we deduce that Spring promises to be cold.
Bitcoin’s market dominance increased from 50% to 54% in April 2019.
BTC’s upward price trend indicates the possibility of higher price climbs in the upcoming future.
The unexplained price rise of 2 April 2019 is leading to greater market uncertainty which tends to keep driving volatility upwards.
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How volatile is Bitcoin relative to commodities like Gold and Fiat Currencies?
Gold’s volatility averages between 1- 1.2% and Fiat currencies averages between 0.5% and 1.0%.
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Volatility due to Market Activity
In April 2019 there were multiple high profile crypto events attended by investors holding large pools of cryptocurrencies. Their decisions drive potentially market volatility in cryptocurrencies with comparatively low market cap. The most important events were
April 3–4, 2019 CryptoBlockCon Los Angeles Los Angeles, CA
April 4–6, 2019 CoinFestUK 2019 Manchester, UK
April 9–10, 2019 Crypto Invest Summit Los Angeles, CA
April 12, 2019 NYC Security Token Forum New York, NY
April 13–14, 2019 Crypto World Expo San Francisco, CA
April 13–14, 2019 EOS World Expo 2019 San Francisco, CA
April 17, 2019 Synchronize: DLT & Crypto for Financial Institutions New York, NY
Bitcoin CBOE futures were traded last on 26 April 2019. Crypto Volatility increases around the expiration of futures. The impact on volatility is justified in Week 4 of April 2019.
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Why Volatility Is Important to Investors
Volatility indicates how risky it is to hold an asset at a given time or a specified period of time. During this time interval, the price may go up or down drastically. The more volatile an asset is, the higher the chance of getting a good short term return at the cost of considerable risk.
Volatility helps investors to revisit their portfolio and analyze risk-return ratio on their investment. It also tends to increase the cost of hedging them. If the price of Tron increases, the cost of converting to and from Tron to Fiat Currency also increases and likewise.
The risk-return ratio is balanced by timing, strategy and market call.
Volatility in Bitcoin has increased in April 2019, after minimal price action for most of 2018. In 2018, the crypto market matured by many degrees and the infrastructure, community, and projects improved vastly. If the space continues to mature, bear market is here to stay.
While volatility and market sentiment continues to affect prices, it is important for traders and investors alike to have access to high quality and accurate data for timely decision making.
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Conclusions for Investors
Price stability makes investors Bullish on Bitcoin
Lower volatility indicates acceptance, stability, and increase in investor’s confidence in Bitcoin. This is particularly true for Bitcoin and it is indicative of a Bullish sentiment. When the price is stable it promotes buying and holding of the asset for immediate and short term spending. This has an overall positive impact on the price of the asset. Adoption of Crypto based remittances will see an increase when the volatility is low.
Altcoins won’t steal Bitcoin’s Thunder
Bitcoin has the largest network and the highest market dominance. Owing to its early start, Bitcoin has amassed faith from millions of traders and investors and altcoins do not seem to catch up with it anytime soon. Investors in Altcoins are divided on the application and use cases while Bitcoin continues to be the first choice for retail investors and institutions alike.
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How to use this data?
Volatility in a digital asset can be attributed to volatility in its trading volume and General Market Volatility. It isn’t sufficient in itself to decide which coin to buy or not to buy.
But based on the risk appetite of the investor, one may prefer more volatile digital assets for higher returns in the short term or less volatile assets for moderate returns in the long term. Stablecoins and less volatile altcoins pose a lower risk and more balanced returns in the long run.
While a stable coin like True USD (TUSD) may be stable for April 2019, it could be the most likely to implode first when controversy surrounds it. Some cryptocurrencies are prone to FUD and pump and dump schemes. It’s up to the investor to identify them and stay away from these digital assets.
It is important for the investor to understand the market trend and causes of the underlying price action. Exchanges offer a wide variety of digital assets to choose from and invest in. There is a considerable difference in the volatility of assets across exchanges globally.
Disclaimer:
The opinions, examples, and references are for informational purposes only. The author has no intention to influence or give any investment advice. This is not an offer or a solicitation of an offer to buy or sell any cryptocurrency, security, product or service. It is not an attempt to drive investment for a product. If interested in investing, I recommend engaging with a duly licensed expert on the matter. The information provided here, the links shared and the predictions made are not intended for sharing, use or distribution in any jurisdiction where it would be contrary to the law of the state.
