Steemit Crypto Academy Contest / S14W2 - Volatility in cryptocurrencies.

Assalam O Alaikum

Hello Steemians! Warm well come to my post. How are you all? I hope that you will be doing well by the grace of Almighty Allah. I'm also fine and enjoying my day. Today I'm here to participate in this Steemit Engagement Challenge season 14 week 2 in the Steemit Crypto Academy. The topic of this challenge is "Volatility in Crypto Currencies". Let's start the task.

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In your own words, how does volatility affect cryptocurrencies? Is it beneficial or detrimental.

First let's talk about volatility, friends a short term fluctuations of the prices of crypto currencies within the crypto market is referred as the volatility. In simple terms we can say that a sharp increase or decrease in the prices of crypto currencies for a short interval of time is called the volatility. Volatility may affect both negativity and positivity on the prices of crypto currencies. Let's discuss about the positive and negative impacts of volatility on crypto currencies and on the traders.

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• Positive Impacts of Volatility;

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Friends when the price of a crypto currencies increase sharply it provides a chance to investors of earning a huge profit. Because many of people buy crypto currencies at very low prices and when the market pumps it provides an opportunity to gain profit by buying low and sailing high.

Due to the volatility the liquidity ratio of the market increase. Because it attracts more traders to the crypto market by providing them an opportunity of buying and sailing crypto currencies at their desired prices. Due to this the trading volume and the assets volume within the market increase which increase the liquidity ratio of market.

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• Negative impacts of Volatility;

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The volatility can also affects the market negativity and increase the situation of FUD, which means fear of missing out. Due to the Volatility when the prices of crypto currencies fall suddenly it creates a Sense of losing assets between the traders and investors of crypto market.

The Rapid decrease in the prices of crypto currencies leads towards manipulation and it attracts the manipulators to the market. So they can get the benefits of volatility and get benefits. This increase the unfair practices among the traders and investors.

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• Is Volatility beneficial or detrimental?;

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From the above two headings you can understand that the volatility can affect both positivity and negatively and it has benefits and drawbacks as well. Where The volatility provide the investor to a chance of getting potential gains by buying low and selling high, but it also affect the invertors who are not mentally prepared for this sudden fluctuations of the crypto market.

A solid risk management is required during the fluctuations and volatility in the crypto market because every investor or trader can't digest the sudden fluctuations and he may lose all his assets during this uncertain conditions. So always stay connected and up to dated with each and every happening in the crypto market so you can get benefits during market fluctuations instead of losing your assets.

Name and describe a technical indicator that measures the market volatility of an asset.

Friends there are different technical indicators which are very useful in determining the market volatility and the market trends of different crypto assets. Some famous technical indicators are Bollinger Bands, Average True range (AtR), Volatility index and Relative Volatility Index. These are the indicators which are often used by the traders or investors to monitor the market volatility. But among all of them the Bollinger bands seemed Me more affective among all of them. Let's discuss about it.

The Bollinger bands is a statistical indicator which shows the stats of volatility of the market over a specific periods of time. Actually that indicator was proposed by John Bollinger and he attributed it with his name. Actually the Bollinger bands is composed of three different lines which shows different values with respect to the market trends i.e volatility.

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With the help of these lines the Bollinger bands show the value of market volatility i.e increase or decrease in the prices of crypto currencies. The middle line in a Bollinger bands shows the moving average while the upper and lower bands are plotted at the standard deviations on the charts. So the upper lines of the bands indicates the high prices of crypto currencies while the lower lines tell us the decrease in the price of crypto currencies.

Finally when the market is experiencing more volatility these bands spread and becomes wider. On the other hand when the market is less volatile these bands narrow and reduce their spreading. So from the movement of these bands we can easily check the volatility of crypto market. That is why the Bollinger bands indicator is very useful for determining the market volatility.

Describe the step-by-step to be able to include this indicator in the STEEM/USDT chart. You can use the Tradingview platform. Show screenshots.

Yes! The way of applying the Bollinger bands indicator is quite simple and easy. Let's discuss about the method of applying the Bollinger bands indicator.

• First of all I have opened the Trading view website and then selected the chart pair of crypto currency Steem/USDT. After this at the top of the line you can seen in the below screenshot there is a option for selecting indicator. Then click on it.

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• In the second step by clicking on the indicators option I have searched the Bollinger bands indicator and in the screen shot you can it is showing its results and then I have selected my desired indicator.

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• After clicking on this option you can see the Bollinger bands indicator has successfully implanted in the following shart of Steem/USDT. Now you you further modify the settings of indicator according to your requirements.

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Explain in your own words, what happened to the volatility in the last month of the STEEM/USDT chart.

Friends in the last month the Steem/USDT chart has experienced a lot of fluctuations and volatility in their prices. As in the above section we have discussed that the Bollinger bands indicator is one of the best and most effective indicators which can determine the volatility of the Crypto assets. So in the below screenshot we can see that the indicator showing volatility of Steem/USDT of the previous month.

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Friends after applying the Bollinger bands indicator on the Steem/USDT chart you can see above the results which is shown by the indicator. So according to the indicator the lines of Bollinger bands are getting closer to each other which means that the volatility of Steem/USDT chart is decreasing constantly. And it is still decreasing constantly.

So the mentioned area from the above picture has clearly shown up the volatility of Steem/USDT with help of Bollinger bands indicator. That all was about the fluctuations of Steem USDT chart ratio of the previous month which was shown by the Bollinger bands indicator.

Do you think the future of cryptocurrencies is more stable? Give your own opinion.

Yes according to me the future of crypto currencies is going to be more stable due to various factors. Currently the crypto currencies are very famous due to the price volatility and sudden fluctuations but many people including me think that the future of crypto currencies will be more stable due to increase in their demands and due to the advancement of technology, regulatory factors and market updates.

There are many factors which can play a vital role in making the crypto market more stable and reliable. These factors including market stability, demand of assets and the well trained investors or traders. More ever as the investors or traders increase then the demand of different assets also increases which allow them to get potential gains by selling their assets and holding in market.

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According to me when any of crypto currency is more stable it puts many positive impacts on the overall performance and stability of crypto market. Such as a stable crypto asset may fetch the attention of investors who wants to do long term investment in crypto currencies. So as the number of stable crypto currencies increase the stability of crypto market also increase.

So we can understand that the stable crypto currencies has been very beneficial and may Play a vital role in making the whole market more stable and can win the trust of people more and more. Friends due to the combination of all these factors I think that the future of crypto currencies will be more stable and I hope that things will be happen in future.

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Note all these screenshots are taken from wwe.tradingview.com website.

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So friends that was my entry about that challenge and I hope that you will like it. Now it is a time to say goodbye to everyone and I want to invite my friends @shabbir86, @yancar and @chefdanie to take a part in this amazing challenge of crypto academy.

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Written by @abdullahw2

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Thanks All ❤️

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