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Educational content, not investment advice.

Souq Dailyسوق ديليSouq Daily

Lesson 5 of 104:005 Sources

Why crypto is more volatile

Video coming soon

Presented by NourIn Arabic, with captions. Other languages are coming.

Educational content, not investment advice. Nour explains how markets work. She never tells you what to buy or sell.

Crypto prices move far more violently than major currencies. Bitcoin fell about 82% from December 2017 to December 2018 and about 70% from November 2021 to November 2022.

  • Liquidity: a smaller, thinner market means large orders move the price more.
  • Round-the-clock trading: news hits the price at any hour, including weekends.
  • Sentiment: the BIS found retail investors chased rising prices and most probably lost money.
  • Valuation: the FCA says these assets have no reliable basis for valuation.
  • Practical answer: smaller position size, sized from your stop-loss distance.

Quick check

Three questions. Pick an answer to see why.

0/3

  1. 1.According to the BIS study, when did retail investors tend to enter Bitcoin?

  2. 2.$1,000 account, 1% risk, stop-loss 10% from entry. What position size keeps the risk at $10?

  3. 3.Which is NOT one of the reasons for crypto volatility discussed in the lesson?

Sources

Every fact in this lesson is backed by the sources below.

  1. 1.CME Group – Can Bitcoin Halving Emulate Searing Rallies of the Past? (Mar 2024)Bitcoin drawdowns: ~82% Dec 2017–Dec 2018 and ~70% Nov 2021–Nov 2022
  2. 2.CFTC – Customer Advisory: Understand the Risks of Virtual Currency TradingVirtual currencies more volatile than traditional fiat currencies; flash crashes; cash market manipulation; unregulated platforms
  3. 3.bitcoin.org – Frequently Asked QuestionsBitcoin price still very volatile because the market is small relative to its potential
  4. 4.IOSCO – Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms (FR02/2020)Crypto-asset trading takes place 24 hours a day; lack of arbitrage between platforms can fragment price discovery
  5. 5.BIS Bulletin No 69 – Crypto shocks and retail losses (Feb 2023)Retail chased prices; adoption lagged price by ~2 months; whales sold while small holders bought; majority likely lost money

Educational content, not investment advice. Risk warning: trading forex, CFDs, gold and crypto carries a high level of risk and may not be suitable for everyone. You can lose more than you put in. Souq Daily is an education platform. Nothing here is investment advice, a recommendation or an offer, and past performance does not predict future results.