Crypto prices in free fall! Why should we relativize?

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A quick look at the cryptocurrencies is enough! The crypto table is almost monochrome, the color red has dominated for a few days or even weeks now. Are you excited to see how much your cryptocurrencies have lost in value? Are you one of the many disappointed people who were waiting for a snowy Christmas on the cryptocurrencies? Whatever the crypto market has in store for us between now and the end of the year, find out why crypto is so much more than a price chart.

Source: Adobe / Rudzhan

Cryptovolatility: a problem?

In general, the adjective is attached to the term “cryptocurrency” “volatile”. If there really are chicken-themed cryptocurrencies (Chicken Zilla, Chickenkebab Finance, etc.), we are actually talking about volatility here! Often accused and seen as the biggest problem with cryptocurrencies, volatility has a bad reputation! But is it really a problem? It all depends on your investor profile!

Yes, if you go into crypto just to win big and fast …

Source: Adobe / deagree

One of the reasons that has driven the cryptoboom since 2020 is their ability to generate big and fast profits due to their… volatility! Among the crypto users is therefore one category of investors interested only in quick gains. We are not talking about traders here, in other words professionals who are able to manage specific tools such as CFDs to win even in the bear market.

But if the volatility of cryptocurrencies allows for quick gains, it is just as likely to cause large and sudden losses. The last few weeks have also been trying to find this type of investor and it’s time for grimace soup. Without wanting to poke the knife into the wound, below you will find the current price of the cryptocurrencies that are currently falling the most.

Price changes over the last 24 hours Price variation over the last 7 days
Solana (SOL) – 4.2% – 24.3%
Ripple (XRP) – 6.5% – 13.0%
Bitcoin (BTC) 0% – 13.8%
Uniswap (UNI) – 6.0% – 26.2%
Algorand (ALGO) – 4.9% – 17.4%

No, if you consider the cryptoecosystem as a whole

Source: Adobe / deagree

Fortunately, there is more to crypto than just being a “millionaire producer.” To think that it would be completely to miss the cryptoecosystem and the revolution that was launched in the background. If one were to dare to make a comparison, it would correspond to fact watch a classical music concert without turning on the sound and only observes the conductor!

Crypto has made it possible to bring forward blockchain technology, already used in many sectors. In addition, Goldman Sachs’ CEO recently praised the benefits of blockchain. For him, blockchain was more important than Bitcoin.

Putting crypto in perspective as a tool in a burgeoning ecosystem, falling prices is not an issue. The important thing to consider is that the technology that supports the cryptocurrencies is part of the (famous) “sense of history”.

While two years ago we could not predict the future of the sector, now blockchain and cryptocurrencies are crucial. Even an institutional player like Bank Of America recently stated that Bitcoin and cryptocurrencies are “too important to ignore”. This recognition in itself is worth some turpitudes of the courses!

Another more prosaic aspect to consider is that cryptocurrencies need to be analyzed over time. Given that the crypto market operates 24 hours a day, 24 and 7 days a week, it is mechanically more volatile than the stock market for example. In addition to tracking real-time cryptocurrencies and being alarmed at the sight of negative percentages, it is important to smooth curves over an extended period of time.

For example, if we take the above cryptocurrencies, which describe their performance since the beginning of 2021, the perspective changes completely:

Price change since January 1, 2021
Solana (SOL) +9.798%
Ripple (XRP) + 263%
Bitcoin (BTC) + 69%
Uniswap (UNI) + 243%
Algorand (ALGO) + 299%

We therefore observe that on a longer time scale the variations become so positive and would make any bankbook blush. Only five cryptos have been considered in this example, but a similar demonstration would be valid on a large number of other cryptos.

Source: Adobe / artrachen

Volatility that decreases as cryptocurrencies grow

All this does not change the fact that at the moment it is never pleasant to see your assets lose value. But the volatility of cryptocurrencies is not inevitable. Decreases in cryptocurrencies, though recurring and brutal, are part of normal process when a new technology is in its infancy.

On closer inspection, a single drop of water generates significant waves in a glass of water. Still, the same drop will be poured into an ocean … not make any waves! The idea that is often taken up by specialists is therefore thatas the crypto will structure, its volatility will decrease. An evolving cryptographer promotes his capitalization. The “big carriers” therefore become less influential during crypto. In addition, the crypto itself proves to be less sensitive to current events.

The crypto market is bearish. At the moment, it certainly does not end the year as a cannonball as expected by many analysts. But far from a crypto-defeat or failure, market decline is it anecdotal in a sector that is becoming more and more structured and will be crucial in 2022.

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