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Although the word volatility is usually perceived as negative in the financial world, much like the name of Lionel Messi is received in the shanty towns of Brazil, volatility has historically been profitable, especially in the cryptocurrency market. It shows some of the greatest opportunities you can get.
The cryptocurrency market experiences much higher price volatility on average compared to traditional markets such as stocks, bonds and Treasury bills. In 2021, the full volatility advantage has been realized.
Market proxies like the S&P 500 Exchange Traded Fund (SPY) are up 27% and Bitcoin (BTC) is up a whopping 140%!
Of course, the story for 2022 is much darker, but bitcoin veteran investors weren’t surprised to see Bitcoin plunge from its highs. In fact, historically during crypto winters, Bitcoin’s value has fallen by more than 60% at least three times in the past before rising again to new all-time highs.
The nature of volatility is that the highs are very high and the lows are very low. But much of the financial world focuses on only half of the sentence. The latter part is emphasized, the former tucked under a blanket and hidden behind a dusty cabinet.
The simple truth is that volatility can present some of the best risk-to-reward opportunities in the market, but investors should invest in exceptional investments to consistently reap the benefits of these opportunities. You need risk management skills and/or professional assistance.
“Volatility is the price you pay when investing in assets that maximize your chances of achieving your long-term goals,” says Gage Paul, a certified financial planner published in a well-known financial publication. increase. “It is expected and could be viewed as a cost to achieving these goals.”
Let’s take a look at how Cointelegraph Markets Pro’s proprietary data algorithm has become traded by volatility in 2022.
Last year, volatility returned to the cryptocurrency market, with BTC dropping to $15,500. That’s a drop of about 70% from his January 1, 2022 valuation of $47,800.
Altcoins have moved even more dramatically — a phenomenon that helped Cointelegraph Markets Pro’s quantitative algorithm, the VORTECS™ score, produce amazing results in automated live testing.
This chart from December 15th shows the performance results of the VORTECS™ score since the beginning of 2022. At the time of publication, the return on investment (ROI) for top strategies is currently over 176%.
For example, in a score-based test scenario such as Buy80/Sell75, the algorithm will buy digital assets when the VORTECS™ score exceeds the first threshold of 80 and sell when it falls below the second threshold of 75. To do.
Simply divide your portfolio between all the assets you currently need to invest in without resorting to fancy rebalancing techniques. The algorithm achieved a 176% return on the highest performing test strategy — Buy 85/Sell 80.
For comparison, BTC has fallen about 70% since January 1, 2022, and the equally weighted basket of top 100 altcoins has fallen further.
The only reason VORTECS™ scores deliver such high returns is because the cryptocurrency market is volatile. It offers multiple entry and exit opportunities in much shorter timeframes than traders typically enjoy in traditional financial markets.
While this may be part of the function of the 24/7 nature of cryptocurrency trading, it is common knowledge that cryptocurrency investors’ risk tolerance is significantly higher than that of Wall Street CEOs. It is also because it is publicly recognized.
So while volatility has well-known downsides, such as the risk of complete and permanent loss, it also has significant potential upsides for traders with strong research skills.
and a powerful research tool.
To see how Cointelegraph Markets Pro provides market movement data before this information is made public… click here.
Cointelegraph is a publisher of financial information, not an investment advisor. We do not provide individualized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risks, including the risk of permanent and complete loss. Past performance is not indicative of future results. Illustrations and charts are correct at time of writing or otherwise specified. Real-world tested strategies are not recommendations. Please consult your financial adviser before making any financial decisions.
All ROI quotes are accurate as of December 27, 2022.
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