The word volatility is typically received as a negative by financial circles just the same way the name Lionel Messi is received in Brazilian favelas, yet volatility historically presents some of the greatest opportunities for gains, especially in the crypto markets.
The crypto market experiences much greater price oscillations on average when compared to traditional markets, such as equities, bonds and Treasury bills. In 2021, the benefits of volatility were on full display:
Market proxies like the S&P 500 exchange-traded fund trust (SPY) climbed 27%, while Bitcoin (BTC) rose a whopping 140%!
Of course, the story is darker in 2022, but veteran Bitcoin investors did not find Bitcoin’s unceremonious drop from its high to be a surprise; in fact, crypto winters have historically seen Bitcoin’s value drop by over 60% at least three different times in the past, before rising again to see new highs.
The nature of volatility is that the highs are very high, and the lows are very low. However, in many financial circles, they only focus on half the sentence — the latter part is highlighted, and the former is tucked under a blanket and hidden in the back of a dusty cabinet.
The simple truth is that volatile conditions can provide some of the best risk-to-reward opportunities in the market, but investors need exceptional risk management skills and/or professional help to consistently reap the benefits of these opportunities.
“Volatility is the price you pay when investing in assets that give you the best chance of reaching long-term goals,” Gage Paul, a certified financial planner shared with a popular financial publication. “It is expected and could be viewed as a cost in meeting those goals.”
Let’s see how volatility aided Cointelegraph Markets Pros’ proprietary data algorithms to trade in 2022.
Over the last year, volatility returned to the crypto markets, pushing BTC as low as $15,500 — a drop of roughly 70% from January 1, 2022’s $47,800 valuation.
Altcoins have swung even more dramatically — a phenomenon that has helped Cointelegraph Markets Pro’s quantitative algorithm, the VORTECS™ Score, post extraordinary results in automated live testing.
This chart from December 15 illustrates the results of the VORTECS™ Score’s performance since the start of 2022. At the time of publication, the return on investment (ROI) of the top strategy is now over 176%.
In a score-based testing scenario, for example, Buy80/Sell75, the algorithm buys…
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