How to Trade in a Volatile Crypto Market

What is Crypto Market Volatility?

Cryptocurrencies are intrinsically volatile as they are a relatively new asset class. They are subjected to limited regulations in comparison to traditional markets.

At the same time, there are a considerable amount of scams and fraudulent activities taking place in the DeFi sector that increase its price volatility. In this manner, prices are lowered or incremented with greater frequency.

How to Identify High Volatility in the Crypto Market?

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It is important for investors to identify the correct timing of the price changes and allocate the factors that drive these fluctuations. Investors can use technical and fundamental analysis to identify price trends and read signs to find the best time for investing in cryptocurrencies.

Here are some important tools that can help investors identify price trends in the digital currency market:


When investors are acquiring cryptocurrencies they can experience price volatility. In the event, that a major financial institution announces that they are investing in a given token, its prices can skyrocket.

On the other hand, the value of a digital currency decreases if there is a hack event or scam report. Therefore, it is important for investors to continue to stay updated on the latest digital currency news.

Price Data

At the same time, investors have to deal with high price volatility based on its historical prices. Depending on various factors analyst inspect the prices of a given digital currency throughout different periods. In this way, they are able to find a correlation and the ratio of impact a factor asserts on the price of a virtual currency.


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Another metric that investors use to determine the prices of a digital currency is its trading volume. The trading volume indicates the demand and investment interest for a digital currency. At the same time, when there is a considerable amount of trading volume the price volatility is also expected to increase and vice versa.

Social Media

Social Media has become instrumental in sharing news about cryptocurrencies and allowing investors to connect with other traders. Any news posted on social media can have a quick impact on the prices of digital currencies within a few minutes.

Investors can measure positive or negative stance towards the prices of a given cryptocurrency based on the ongoing trends and discussion within the local community.

How to Trade in a Volatile Market

A volatile market means that prices change at a rapid succession. The massive leaps in prices can result in massive losses for investors who are not able to read the changes and measures the factors that impact the prices of these digital currencies. However, investors can use the following tips to navigate their portfolio during a volatile market:

  • DYOR or do your own research. It means that investors should collect data from all resources and to conduct detailed investigation before buying or selling cryptocurrencies.
  • It is best to use stop-loss for protecting the investment against massive losses. Stop-loss allows investors to sell the virtual currencies automatically if its prices drop below a set threshold.
  • It is best to stay calm and avoid responding with panic during volatility phase.
  • Create and amend a solid trading strategy to streamline the trading process and avoiding emotional trading.
  • Don’t place bets outside of your risk appetite. Only enter leveraged position after gaining substantial market experience.
  • It is best not to time market and proceed with patience.

Best Trading Strategies for Volatile Crypto Trading

For most investors, market volatility can seem like a challenge or a drawback. However, skilled investors view volatile markets as an opportunity to maximize profits. There are various trading strategies that are designed for volatile asset classes or durations.

Swing Trading

Swing Trading is an investment strategy that involves purchasing digital currencies at a lower price and selling it for a higher price after a short duration. This is a short-term trading strategy and requires identifying the smallest price changes in the price of a given cryptocurrency. Swing traders use technical indicators to ascertain price changes before placing any bets.

Dollar-Cost Averaging

Dollar-cost averaging or DCA is a type of long-term trading method that allows investors to continuously increment their trading positions with a set amount capital. In this manner, the investors are able to benefit from the compounding effect.


Hedging is a trading strategy that allows investors to create positions in types of cryptocurrencies that have adverse price correlations.


Cryptocurrency investors can employ technical indicators to their advantage as a way to read the smallest price changes in a given virtual currency.

Author: Isacco Genovesi

Isacco writes news articles, reviews and guides about cryptocurrencies including technical analysis, blockchain events, coin prices marketcap and detailed reviews on crypto exchanges and trading platforms.

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