This year, we can observe that crypto-currencies rise and fall even by 15% in value daily. We know such price changes as volatility. But what if... this is completely normal and sudden changes are one characteristic of crypto-currencies allowing you to make good profits?
First, crypto-currencies have entered the mainstream recently, so all the news about them and rumors are “hot”. After every statement from government officials about the possibility of regulating or banning the crypto-currency market, we see huge price movements.
Second, the nature of crypto-currencies is more like a “store of value” (as gold had been in the past) - many investors see them as a backup investment option to stocks, physical assets like gold, and fiat (traditional) currencies. The speed of transfer also affects the volatility of the crypto-currency. With the fastest ones, the transfer only takes a few seconds (up to a minute), making it a great asset for short-term transactions if there is no favorable trend in other types of assets at the moment.
What everyone should keep in mind is that speed also applies to long-term trends in crypto-currencies. While in regular markets, trends can last for months or even years, here they occur in a matter of days or hours.
This brings us to the next point: although we are talking about a market worth hundreds of billions of US dollars, it is still a tiny amount compared to the daily trading volume compared to the traditional currency or stock market. Therefore, a single investor making a $100 million transaction in the stock market will not cause a huge price change, but on the scale of the crypto-currency market, it is a significant and noticeable transaction.
Because crypto-currencies are digital assets, they are subject to technical and software updates to crypto-currency features or the expansion of blockchain collaboration, which makes them more attractive to potential investors (such as the activation of SegWit which basically doubled the value of bitcoin).
These elements combined are the reasons we see such large price changes in the price of crypto-currencies in a matter of hours, days, weeks, etc.
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But to answer the question in the first paragraph - one of the classic rules of trading is to buy low and sell high - therefore, having short but strong trends each day (instead of weaker trends that last for weeks or months like on stocks) gives a much better chance of making a decent profit if used correctly.
