Why doesn't the XRP token take off with so much good news?!? It seems you can’t open a newspaper, eh … 2018… it seems you can’t open your tablet without seeing something regarding: XCurrent, Coil, David Schwarz, a lot of transactions per second, testing XRapid. Currently we are at around 50 dollar cents tho, but if you want to know more about (good) news and the price of XRP, read Panosmek’s Blog:
Volatility is going to be the word of this Blog.
Regarding Price Volatility, the amount of price change over a given period of time , we need to determine whether this is good thing or not and what causes volatility. If a crypto currency is very volatile, it means it (can) hit(s) new highs and lows in a short amount of time; rapid increases and dramatic falls. This will not affect the ‘HODLERS’ among us, but for day traders/ frequent sellers and buyers, volatility is a possibility to make quick profits. Quick profits do however also mean quick losses…. and it seems, more people are affected by the losses than the gains. Each trade is risky and is absolutely not for everybody a relaxing way of living.
Volatility in Crypto Currency is very high. If you have an account manager helping you, he/ she will start saying/ said: It is very risky to invest in crypto currency and know what you do, followed with the sentence, so 1990’s, only invest money you can afford to lose ……
W R O N G ! ! !
We live in 2018: only invest money you can set aside for 2, 3 years!
Volatility described by David @joelkatz Schwartz in his blog on Quora was 1: read by Paris by David - @parisbydavid, and 2: beautifully translated into a small infographic. Let’s look at this infographic and see what volatility in 5 points actually means. Do know that we are not only looking at XRP within these 5 volatility drivers:
- Utility Value
Utility Value is the TRUE price of a coin/ token/ currency when news does not influence the price anymore. That is pretty difficult, as a lot is written about crypto lately, (specifically if you get all the RSS feeds from websites/ Twitter and other social media).
In other words, if crypto currencies crash big time, you would end up at the utility value of the coin. Thus: when do you know you hit rock bottom – hence David’s words: no clear basis to objectively measure value.
FOMO (Fear of Missing Out) / FUD (Fear, Uncertainty and Doubt) and the neighbor screaming, his/ her coin is the best of the best is not helping either, so this makes coins volatile. Different investors, react different to this fact. A true Hodler does not care, closes his/ her newspaper….. eh app and starts playing with his/ her stone / stamp collection, the follower, not so hodler, will panic sell, they say “prices will definitely go to zero”, and this gives a different signal to the market, up, down, up, down, hence volatility!
- Speculative Value
Together with Utility Value, Speculative Value makes up what a coin is worth If we have seen an ATL (all time low), the price is rising, it would be easy (maybe too easy) to just say Utility Value was ATL and Speculative Value current value minus ATL. Not knowing that the price CAN and maybe WILL go lower than the previous ATL, but that was explained under utility value. Speculative Value is fed by news, FUD and FOMO.
An example of FOMO: In a street with 10 houses and 9 of them invest in XRP. Next BBQ, wat do you think happens with neighbor 10 when talking about Crypto, good luck!!
News: 10 banks using XCurrent, positive tests, 5 use XRapid, goes well, what will this to the price, sale of XRP….. FUD, makes crypto currency volatile as people move in groups, feel stronger if the other does the same. “WE” sell and “WE” buy, wrong!
- Immature and Illiquid Markets
If you think Crypto has been adopted, eh ………… no, but ….. what if………..no not at all!!! We are still in the early days and if you read this blog at the moment, congrats, you are part of the first group, well … , of crypto investors, Hodlers. The market is still immature, it is still young, we don’t know everything. You ALL, know that one person telling you, oh don’t worry, Chinese New Year around the corner, just wait!!!! Last Tax Day, it is going to fly ……….. because these two things happened last year. Well, they did not happen in 2018!! We are young – immature.
Illiquid, stands for difficulty selling the coin, due to lack of interest. There might be interest, but XRP outside the XRP Community is definitely not a common used conversation topic. Mentioning ATH, FUD, HODL, may trigger something but ask 10 random people in your company (no Wietse not directed at you), what XRP is, in most businesses more than 75% has to use one of their three lifelines: Ask the Audience, 50;50 or Phone a Friend, Makes the market very volatile.
Manipulation is done everywhere with different reasons. Whether XRP is added to a specific Exchange, Security yes or no, Freezing XRP, FUD FUD FUD. Very dangerous and can lead to major falls or rises, which is lead in a lot of cases by investors with big bags, as they profit the most by a certain market direction. Think this does not happen, think again! Manipulation is a big volatility component and is for Technical Analyst very difficult to forecast as this happens very sudden, but changes the direction oh so fast
As people like to follow each other and feel stronger if ‘the other one’ thinks a like and copies their actions, this will / could start a mass movement in a ‘wrong’ direction. If you believe this is NOT happening, as a lot of people refuse manipulation, it has been proven and it is correct. Have you never been asked to join a telegram group / WhatsApp group - Pump and Dump (eh .... not you, well ...). Whether that happened or not, you are more than likely going to end up on the wrong side, the not so profitable side, but not you…. I know, not you!!!!
Momentum looks to be a sort of manipulation, but gives a ‘warmer feeling’ in the stomach. If the whole company (no, not yours Wietse), talks about a coin, even people that claimed the coin/ token to be a security or a bubble, than you have momentum, what causes the price to go up. This often reflects a whole market, or the market that is talked about a lot: Top 10 coins. This will help the market and makes the market go up. This often is only temporarily and when ‘doubters’ are cashing out, prices may slow down and start to drop. In many cases price will go lower than previous and momentum has shifted into the other direction. Not where you want to be.
In other words, volatility is a very big player in the Crypto Currency Industry. Up / Down, you can profit in these swings, but be careful, you can also loose.
As the products are still very young, we do not know all the components yet and as long as people buy and sell with emotions, many factors will influence the price of the cryptocurrency,
Be careful, or do not be careful, but in both situation, have a strategy and go for it. YOU thought of it, so it more than likely will work out. Enjoy!
Big thank you to Paris by David, as he created the creatives in this Blog