Why is Cryptocurrency so Volatile?
If you’ve ever looked at a crypto price chart, you’ll notice it moves up and down much more than regular stocks and currencies. THis is called volatility, and it’s one of the biggest differences between crypto and traditional investments.
One reason is that crypto is still relatively new, and the market is small compared to other asset classes like stocks or bonds. That means prices can move a lot when big buyers and sellers enter. Another reason is that crypto prices are heavily driven by news, hype and sentiment. A single headline about government regulation or celebrity endorsement can send prices soaring or crashing.
Crypto trades 24/7 all around the world, there are no “closed hours” to calm things down, which makes swings even sharper. It is improtant to understand that volatility can bring both opportunity and risk. Never invest more than you can afford to lose.