Crypto Volatility & De-Coupling

Written by Maurice Cardinal

*Is there a solution to roller coaster volatility and wild crypto price fluctuations?

Yes, of course, but it’s complex, and it can’t be tamed with just one strategy.

Change is no longer just about technology.

Psychology also plays a role, respective of trust.

Do you trust your bank, your government, your crypto coin?

The overarching answer unfortunately, is often a resounding NO!

Traders need to separate fact from fiction. De-Coupling has to occur on a number of levels, but to think it is simply a technological issue is grossly naive. It goes way beyond ones and zeroes and dives deep into your grey matter. Psychological weakness is reflected in the lack of discrimination among traders. Most buy on a whim without any form of deductive reasoning. New traders are treasured by experienced traders because skilled traders know how to leverage the volatility that excitable blind followers inject into the ecosystem. They also know how to work the Pump and Dump volatility that whales purposefully leverage. Thankfully that trend is winding down a bit as traders now increasingly look for recognisable safeguards and similarities between crypto and traditional stock and securities platforms. Trading experience and regulations help smooth out the wild peaks and troughs.

In order for the crypto financial ecosystem to stabilize, coins have to de-couple from centralised entities like Bitcoin and stand on their own, ideally supported by some sort of utility. In other words, coins need a “use” beyond just trading, which thankfully started happening in early 2018 and is continuing to evolve in this direction – although it doesn’t seem fast enough.

Ideally, coin de-coupling would be more effective if it occurred during a bear run when people are more calm and able to think intellectually and not react emotionally. Bull runs create too much excitement and feverish anticipation of quick profit for most traders to think clearly. De-coupling occurred in the bull run of 2013 when there were twenty or so coins, of which most have disappeared. We need the same thing to happen today to cull the herd of useless coins contaminating the ecosystem, and it will take the big players to initiate this evolution. Traders who act intellectually and not emotionally, and developers who are building organic utility into their coins will help make the market stable.

Again, education is critical … If one doesn’t know what to invest in because the market is too complex and volatile, one will get tired of the “gambling” aspect, and consequently won’t invest in crypto, because the truth is, one doesn’t need Bitcoin to get a Flash Trading fix.

Education goes well beyond pricing. You need to know how the entire ecosystem operates.

One goal of crypto is to replace, or at least provide another option for the current fiat financial arena that is supported by real gold reserves.

Enter, Digital Gold!  … according to Wikipedia, “Proponents claim that DGC [Digital Gold] offers a truly global and borderless world currency system which is independent of exchange rate variations and political manipulation. Gold, silver, platinum and palladium each have recognized international currency codes under ISO 4217.”

Volatility will only be tamed when a number of tertiary events take place that will provide traders with an element of trust that allows them to make intellectual and studied decisions.

Don’t hold your breathe though – change takes time!