Coinbase Warns about Cryptocurrency Volatility

The US-based digital currency exchange, Coinbase has warned cryptocurrency investors about Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term in digital assets after the recent price rally. The exchange asked customers to consult financial advisors before investing in Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term.

In an official blogpost on Coinbase, CEO Brian Armstrong outlined the risks associated with cryptocurrency investments and mentioned that digital assets are more volatile than traditional financial instruments.

Armstrong said that cryptocurrencies can move up or down much faster than the equity markets and that is why it is important to learn about the downside risks of the investment in digital assets. The CEO of Coinbase said that the crypto market has a lot of potential, but it is still in the early stages.

“While it’s great to see market rallies and see news organizations turn attention to this emerging asset class in a new way, we cannot emphasize enough how important it is to understand that investing in crypto is not without risk. For one, crypto can be a volatile asset class, often more so than the types of traditional financial instruments that most investors are used to,” Armstrong mentioned in the Coinbase blog.

Bitcoin Price Rally

Bitcoin jumped above $20,000 on 16 December and registered a new high of $23,000 today. According to the recent reports, Coinbase and Binance faced connectivity issues yesterday due to unexpectedly high traffic caused by a sudden price jump. Both exchanges resolved the technical issues yesterday. The blogpost from the Coinbase CEO shows that crypto volatility is still a point of concern for the market.

“During periods of extreme demand, like those we’re witnessing right now as a result of the current market rally, we work tirelessly to deliver on this promise. Although we may occasionally fall short, we will always do our best to address our shortcomings and transparently communicate any information that our customers need to confidently manage their accounts and make informed trading decisions,” Armstrong mentioned in the blog post.