16 Most Volatile Crypto to Trade & Invest in 2023 | Notum
What Is Volatility in Cryptocurrency?
Volatility is a measure of the speed at which the price of a financial asset varies over time. The Greek letter “beta” often represents it, which is used in statistics to measure volatility. Volatility has two main aspects: directional and statistical.
Directional volatility is the tendency of an asset’s returns to exhibit large changes over time. For example, if the price of a stock moves from $1 to $5 and then back down again, it exhibits directional volatility during that period. Statistical volatility describes how much prices move up or down over a given period of time. A volatile asset fluctuates significantly when compared to other assets in its class.
Volatility is important because it affects an investor’s ability to estimate expected returns on investment and hedging costs and risk tolerance levels. A highly volatile asset may have large swings in its value over short periods but also may offer outsized returns when compared with less volatile assets over longer periods of time.
Stocks, bonds, real estate, and other assets that you buy and sell in the market are considered to be less volatile than cryptocurrencies. That’s because stocks and bonds are tied to a company’s performance or economy, which is relatively stable over time.
On the other hand, cryptocurrencies are highly volatile because there are a lot of different factors that influence their prices. Further, we are going to take a closer look at each one.
Why Is Crypto Volatile?
There are quite a few reasons for cryptocurrencies to be volatile. Here are the main factors:
1.Demand and supply
This is the number one factor by all means. Crypto prices are very sensible of the number of people involved. The more users there are, the higher the prices are.
2. Hype
Hype attracts attention and, thus, increases interest and involvement. However, the positive effect after the hype only lasts for a while. It usually leads to a significant fall, which follows the user’s outflow.
3. Usability
Coins and tokens can survive if they bring real value to their holders. Whether within a platform or everyday life, people should understand why they purchase the asset.
4. Regulations
This factor is a relatively new one. It is only recently that governments worldwide stepped into the regulation process. New laws and regulations that influence crypto owners also influence the price.
What Are the Most Volatile Cryptos?
It is rather difficult to choose the most unstable crypto. However, some are slightly more volatile than others, usually due to the number of users.
1. Bitcoin (BTC)
Bitcoin is one of the most famous cryptocurrencies. Also, it is a highly volatile crypto. It is highly reactive to users’ demands and new government regulations because it is an alternative to fiat currencies.
2. Shiba Inu (SHIB)
Shiba Inu is one of the mem coins and the most volatile cryptos. That was created as a joke in 2020 and quickly gained popularity among users.
3. Solana (SOL)
Solana is a famous project in the decentralized finance world. It provides DeFi solutions and gives a platform for DApps development.
4. Dogecoin (DOGE)
Dogecoin is an infamous meme coin that features a Shiba Inu dog as its logo. It forked from Litecoin back in 2013. One of the reasons for its volatility came from Elon Musk, who promoted the coin actively and thus attracted an unexpected amount of attention.
5. Litecoin (LTC)
Litecoin developers tried to solve one of the most urgent problems. With this coin’s help, the idea was to provide fast and rather cheap transactions. That would enable crypto payments.
6. Ethereum (ETH)
Ethereum was created as a platform for decentralized applications. It is the first service to introduce smart contracts. It turned out that blockchain combined with smart contracts has various possibilities. Moreover, the ERC-20 compatibility standard allows Ethereum to host tokens.
7. Sandbox (SAND)
SAND is a token of a Sandbox, a metaverse that allows users to create and trade NFTs. This gaming community got a new level of improvement with the combination of NFT and DAO.
8. ApeCoin (APE)
ApeCoin is a platform that aims to build Web3. Thus, this is a decentralized community where holders can influence the improvements with the help of APE tokens.
9. Stellar (XLM)
Stellar is a platform meant to connect the global financial system with a protocol that would allow it to move funds fast and cheaply. A native coin, XLM, is used to cover transaction fees.
10. Decentraland (MANA)
Decentraland is a VR platform that is built on the Ethereum blockchain. Here users can create content and apps and monetize their work. The MANA token is used to make payments on the platform.
11. Uniswap (UNI)
Uniswap is a DeFi trading protocol that enables automated trading. Its native token, UNI, gives its holders additional opportunities, such as passive income and participation in Uniswap governance.
12. Bitcoin Cash (BCH)
Bitcoin Cash is a platform for fast and cheap p2p payments. It excludes the third party from the process. It was created as an alternative to Bitcoin, only with better capacities.
13. Fight Out (FGHT)
Fight Out is a move-to-earn project created for healthy lifestyle adapts. It is a platform with various fitness apps. It incentivizes users for their sports achievements with the native token FGHT.
14. Dash (DASH)
Dash or “digital cash” appeared as a fork of Litecoin to create a better payment opportunity than Bitcoin. It has stronger security and faster speed, and its nature decentralizes it.
15. RobotEra (WBNB)
RobotEra is one of the metaverses where people have a play-to-earn experience. People can create their robots and some parts for them, communicate with each other, and trade their creations.
16. Tamadoge (TAMA)
Tamadoge is a gamified metaverse for pet lovers. The idea to put together meme-tokens, NFTs, and play-to-earn experiences became a success. The TAMA token shows a good dynamic and has an interesting future.
Bottom Line
As can be seen from the above, a lot of cryptocurrencies are highly volatile. The more popular they are, the more fluctuation there is. The main problem remains how to deal with this volatility. There are several ways. First of all, some crypto holders trade on it.
However, it is quite risky. The other way is to follow the hype, buy crypto at the bottom and hold until it rallies. Finally, the last thing to do is to look at cryptocurrency as a long-term investment. It is important to mention that there is no safe way to own cryptocurrency. There is always a chance of losing.
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