What is Crypto Volatility and Why Should You Care About It?
Volatility rate is a measurement of how much the price of an asset moves up or down over a specified period of time. Crypto volatility is thus, how much the price of a cryptocurrency moves up and down over a period of time. This can be week-to-week, day-to-day, or even intra-day. Cryptos are famous for having even high intraday price swings and traders give a lot of attention to crypto volatility for the following reasons.
Reason 1: Risk Management
Before a trader can earn money from trading, he must know how to manage risk. The number one reason why traders ought to be concerned about price volatility in crypto is to avoid getting stopped out of their trade, ie lose money, due to unexpected spikes in prices.
Reason 2: More Trading Opportunities
Another reason why traders should know about crypto volatility is because of the number of trading opportunities. A more volatile asset generates more trading opportunities than a less volatile asset due to it having more up and down price movement. As a result, volatile cryptocurrencies have been attracting more and more traders who seek to make a fortune trading the crypto market.
Reason 3: To Know How to Hedge When Caught
As traders who trade often know, it is not possible to be 100% correct all the time. Sometimes, understanding the volatility potential of a crypto can help one reposition another trade within the known volatility boundaries of the crypto to effectively offset the losing money trade with the gains from another trade. Thus, hedging can help a trader mitigate his losses when he unfortunately gets caught in the volatility of the markets.
Why is Crypto So Volatile?
The main reason why crypto is as volatile as it is due to the fact that it is still a nascent industry which many traders still do not fully comprehend and thus, the issue of herd mentality and being led by feelings of greed and fear is especially rampant in crypto trading.
Secondly, the crypto market is still not properly regulated, unlike the stock market. The lack of regulation creates opportunities for bad actors to pump and dump a crypto without much legal implication, which results in significant volatility in many altcoins even by crypto standards.
Before we dive into the deep end exploring each volatile cryptocurrency, we need to warn readers about the risk involved in trading complex instruments like digital assets. In particular, cryptocurrency speculation comes with a high risk of losing money. The price value of digital coins may fluctuate greatly from time to time and readers are advised to not trade more than what they can afford to lose. This article is not a solicitation to trade but serves merely as an educational guide. When in doubt, please seek advice from your independent financial advisor.
Now, Let’s List The 18 Most Volatile Cryptos in 2022 (not in order of volatility)
1. Ethereum (ETH)
The first crypto on the list is Ethereum (ETH), which has the highest market capitalisation on the list and is listed on all big exchanges, even on non-crypto native futures exchanges like the CME and ICE, as every exchange operator wants a slice of the trading fees associated with ETH due to its rising importance as a mainstream investment asset.
ETH dropped from its early year high of $3,722 to a low of $800 in June, for a fall of more than 78% due to the forced liquidation of a few large crypto funds caught not managing their risks in the bear market. The result of the liquidations has caused the price of ETH to tumble especially heavily from early May, which has given short sellers a windfall by shorting it on the way down from the break of $2,400 to the low of $800 for a net gain of 66%. A $800 ETH proved to be a very attractive price for long-term investors who took the opportunity to load up and since then, the price of ETH has made a steady recovery of more than 50% from its low to become a great bargain indeed.
2. Dogecoin (DOGE)
DOGE was made famous by the world’s richest man, Elon Musk, during last year’s crypto bull run. Every time Elon tweeted about the meme token with a Shiba Inu dog’s smiling face, the price of DOGE would surge fanatically. This has netted DOGE an approximate volatility of 18,750% last year!
This year hasn’t been as good to DOGE as the price of the meme coin has been on a decline since last May after a PR disaster by Elon Musk. Moving forward to this year, DOGE has continued to decline as the entire crypto space is in a bear market. However, DOGE remains a firm favourite amongst traders due to its record of having big sudden price spikes and falls which makes for good trading.
3. Shiba Inu (SHIB)
After talking about DOGE, how can we not mention the DOGE copycat, Shiba Inu? SHIB emerged as the copycat to DOGE, calling itself the Dogecoin killer. Indeed, the token managed to carve out an impressive growth pace that surpassed that of DOGE, gathering a mind-blowing 9,100,000% growth at its peak in just over one year, earning SHIB the title, the most volatile crypto over a one year horizon.
SHIB was launched in 2020 and initially had a negligible value until several major crypto exchanges listed it, where its volatility figure exceeded that of DOGE. Where DOGE has risen 200% in one day, SHIB has easily risen over 300% in a day. Despite having retreated due to the current bear market, SHIB is still up more than 3,000,000% at its current price.
4. Polygon (MATIC)
Originally known as MATIC network, Polygon had a change of fortunes after a name change in February 2021. To not confuse its community, the team decided to keep the ticker and name of its native token as MATIC. After the name change, the price of MATIC rose from under $0.002 to a high of $2.40 before plummeting to a low of $0.69. Just when many crypto experts said that the run for MATIC was over, the token rebounded and rose steadily to hit a high of $2.90 in December 2021. This makes MATIC one of the most volatile cryptos in the market.
This year, due to the crypto bear market, the price of MATIC has been lacklustre compared with 2021. However, MATIC remains as one of the most resilient cryptocurrencies in this bear market, losing only 69% of its value, and has already doubled in price value from its low made in June. The most volatile crypto indeed!
5. BNB Chain (BNB)
Being the second ever blockchain to support smart contracts after Ethereum, BNB burst into heightened volatility in the early part of the 2021 bull run, exploding 1,659% in just 4 months. Although after other blockchains with similar capabilities were created which took some market share away from BNB, its relatively cheap processing fees and speed continues to make it a darling among DeFi users.
With its adoption not receding, the price of BNB has shown a steady recovery from its low made in June, earning back more than 60% of its market value since. BNB is another altcoin that has been outperforming the rest of the crypto market so far in 2022, coming in just after MATIC as one of the best performing and most volatile cryptos of 2022.
6. XRP (XRP)
As the native token of Ripple, XRP has been under fire over the last two years because of a lawsuit filed by the US SEC claiming that its founders sold it as an unregistered security. This lawsuit caused many US exchanges to delist XRP, causing it to miss the bull market of 2021.
Despite this, there has been notable periods of huge price surges regardless, as team Ripple is still painstakingly creating partnerships with global payment systems to use XRP, driving its adoption. In February of last year at the beginning of the crypto bull run, XRP saw its biggest volatility surge in recent times, gaining 450% from $0.40 to a high of $1.80 before dropping back down in a bumpy ride as the lawsuit continues to drag.
7. Stellar (XLM)
Formed by a team of former developers from Ripple, XLM has traded almost in the same trajectory as XRP until Ripple got hit with the SEC lawsuit. As the movement of XRP became more influenced by progress on its lawsuit, XLM began to chart its own destiny. For 2021, XLM’s approximate volatility was an impressive 1,000% and finally let XLM come out of the shadow of XRP. For the record though, XLM has consistently had a higher volatility than XRP due to its penchant for having sudden abrupt wild swings in price. Nonetheless, once a trader manages to catch the swings, he can earn a lot of profit from trading this altcoin.
8. Bitcoin Cash (BCH)
As the first forked token off the Bitcoin network, BCH saw its highest volatility in the first year of its launch in 2017. It went from under $100 to almost $4,000 within just 4 months but its price has been on a bear trend since. Despite this, the volatility rate of BCH is still very high. In 2021, the volatility figure for BCH was 400%. Even though the hype has fallen from its early days, BCH is still the 30th largest crypto.
Since the year 2022 is a bear market, the price of BCH has come off together with other major cryptos. Nonetheless, this still gives traders opportunity to earn by shorting it as its price saw a big downward move between May to July.
9. Bitcoin Gold (BTG)
As another fork of Bitcoin, BTG similarly appears to have passed its hay days. However, it may be too soon to discount the token as BTG has performed exceptionally well this year.
With a volatility of around 300% even in a bear market, BTG is easily one of the most volatile cryptos in 2022. BTG is one of only a few cryptocurrencies that is out of a bear trend after rebounding strongly off its low made in July, rising 150% when most other cryptos rose about 50%. This shows that BTG is a very volatile crypto that is a good choice for active trading.
10. XYO Network (XYO)
XYO is an erc-20 token built on Ethereum that allows owners of any digital device to generate crypto rewards. Its concept is derived from big data, where owners of their own data can trade it in a data marketplace. This is also useful for businesses to track the users of their competitors. Despite being relatively new as the token was launched in 2018, it is gaining traction even in a bear market. Looking at the volatility history of XYO in 2021 when it made a 7,440% gain, long-term investors and traders alike are optimistic about the volatility potential of XYO in the second half of 2022.
11. Solana (SOL)
SOL was one of 2021’s best performing crypto that was the fastest to make it into the top ten. By this account, one can easily deduce that SOL was also one of the most volatile cryptos which rose 7,183% in 2021. However, being affected by the bear market of 2022 and some reliability issues has caused the price of SOL to tank 77% this year to become one of the worst hit cryptocurrencies of the year, which nonetheless still means traders could have made at least 77% by shorting it.
12. Avalanche (AVAX)
Dubbed as the Solana killer, AVAX is an even newer altcoin than SOL as it was created in September 2020, just in time for the 2021 bull market. AVAX had a phenomenal run last year riding on SOL’s success as it well positioned itself to be a better version of Solana. AVAX’s volatility rate in 2021 was 3,857%, having risen from $3.50 at the beginning of 2021 to $135 at its peak. Although AVAX has retreated with all other cryptos in 2022, it is still up more than 700% from the beginning of 2021, making it one of the most volatile cryptos in the past 2 years.
13. ShapeShift FOX Token (FOX)
FOX, an erc-20 token of the ShapeShift crypto trading platform, managed to generate a 850% growth in 2021. This was caused by the management team’s decision to change into a decentralized model of operations that was welcomed by market participants, who chased the token up 300% within just a couple of hours.
Even though its price has had a steady decline over the 2022 bear market, FOX appears to be forming a bottom and traders are confident that its volatility will return when there is a crypto rally again.
14. Telcoin (TEL)
The volatility of another erc-20 token, TEL, shows an astounding figure of 9,795% for 2021, led by a protocol upgrade that had traders FOMO-ing for the token. TEL is a remittance token that is seen in the same light as XRP and XLM, and thus, also share the same volatility profile of these two tokens. But since its volume is not as high, its volatility is exaggerated due to needing less amount of money to move its price.
When there is a play on remittance cryptos, TEL will likely see its volatility surge massively again as it is currently forming a very nice base.
15. Dash (DASH)
Another payment token, DASH, had the best volatility during the 2018 bull run when it surged from $10 to $1,100 over 6 months, a volatility score of 11,000%! This was easily the most volatile crypto of the time and made many investors crazy over its fast rate of return. While its volatility profile has calmed down a lot from its early days, DASH nonetheless still experiences regular spikes in price, just like how it managed to garner a volatility of 400% in 2021.
Moving to 2022, DASH has similarly experienced sudden bouts of price surges before retreating afterwards, which can still provide traders with good profits should they be able to spot the correct trend and trade with it.
16. Litecoin (LTC)
As one of the earliest payment cryptos, Litecoin, just like Bitcoin, needs no introduction. During the 2017 bull market, LTC had just an impressive a run like DASH. Currently, it is still getting bouts of high volatility and still commands a high trading volume. In 2021, it surged 500% even as a legacy payment altcoin that did not have many upgrades. Thus, never discount LTC for what it can do since it has a supply limit of only 84 million LTC to ever be created.
17. Axie Infinity (AXS)
Axie Infinity was born out of a new earning model that was invented late in the year 2020. Known as play-to-earn, it allows users to play a game and get rewarded a token known as SLP which users can then sell at crypto exchanges for fiat. This revolutionary model proved to be very popular, which sent the price of the governance token of the game, AXS, to surge by 16,000% last year.
After coming back to earth as the initial hype ended, AXS is now forming a base around the $20 level. Adoption of the game is still ongoing and crypto experts expect the Ethereum-run erc-20 token to gradually stabilize in price over time. However, the token is still up 2,000% regardless, and traders who shorted at the $160 top last year are also laughing all the way to the bank. This large two-way up and down movement certainly makes AXS one of the most volatile cryptos of all time.
18. StepN (GMT)
The last token we are going to look at today is GMT, the governance token off a spinoff idea generated by the play-to-earn concept. With a similar concept called move-to-earn, StepN allows users to walk to earn tokens that they can sell for fiat. Users need to first purchase special GPS-enabled walking shoes using the GMT token to track the number of steps you take so as to reward you with a token called GST that you can sell for fiat at exchanges. The shoes were so popular that potential users needed to wait for a month to get a slot to buy the shoes. That demand drove the price of GMT, which is a Solana-based spl token, to surge from $0.15 when it launched in March 2022 to $4 by April to put in a volatility of 2,667% in just a month, making it the most volatile crypto of 2022, and the only one amongst the 18 we have looked at that is still positive for the year.
How to Profit From Crypto
After looking at the list of potential cryptos you can trade, are you excited about starting your crypto trading journey yet?
It is very fast and easy to start trading crypto. Simply open an investor account at Margex by going to the website, https://margex.com/app/signup
With a Margex account, you will be able to earn from both buy and sell trades to take advantage of the volatility in crypto prices to maximise your profit potential.
After learning about how volatility in crypto can be a boon to traders and knowing the top volatile cryptos best suited for trading, let us go through some common questions to better equip you so you have an upper hand over other traders!
What Crypto is Volatile?
Every crypto is volatile due to the nascent technology that it still is. However, a particular crypto may be more volatile than others at different stages of its life cycle due to upgrades, partnerships, or other fundamental reasons peculiar to that crypto.
What Time is Crypto Most Volatile?
Crypto used to be equally volatile at almost every hour of the day since cryptos never sleep. However, after the China ban on cryptos in 2021, volatility in crypto has become more focused and intense during the American time zone. For traders who like to watch their trades and do intraday trading, trading in this time zone may bring you greater excitement.
Which Crypto Has The Most Potential?
Due to the ever-evolving technology and the fact that every blockchain is still improving and seeking to become better versions of themselves, every crypto has potential. It is almost impossible to pinpoint which crypto has the most potential. Please have a look at the guide we painstakingly put together for you above to decide which crypto you think have the most potential.
Which Crypto Has The Most Volatility?
While all cryptos are volatile, broadly speaking, the newer the crypto, the more volatile it is due to a lack of knowledge on the crypto as well as a lower trading volume. A lower trading volume can result in heightened volatility as it takes less funds to move the price of the crypto, which may lead to an increase in dump and pump schemes. However, if traded correctly, this can yield a trader fantastic profits as well, provided proper risk management and position sizing is exercised to prevent the trader from getting wiped out from the volatility.