Is Ethereum Volatile? Is It a Security?

Ethereum was, in the first place, conceived in 2013 by Vitalik Buterin who’s the founder of this ecosystem.

When Ethereum’s whitepaper came out for the first time, it described the blockchain as an evolution of Bitcoin enabling not just payments but smart contracts as well.

With the first block ever mined in July 2015, Ethereum has become not only the largest smart contract platform of its kind but the second-largest blockchain of all time as gauged by market capitalization.

The rapid price fluctuation has attracted a lot of investors as well as developers. Currently, if we turn 1 ETH to INR, it costs about INR 45,627 at the time of writing this article.

This frequent price change has questioned Ethereum’s volatility and security.

Is This Important to Track Volatility?

Yes, it is of very much importance to track the volatility.

Volatility is a calculation of the price movement amid a certain timeframe.

Ultimately, high volatility comes along with sharp value moves (both up or down). Then again, low volatility is a sign of solidifying or gradually moving market.

Investors, as well as traders, use volatility to measure the risk of a potential asset. The overall dependable guideline is that extremely volatile assets are risky, while less volatile assets are less so.

The most popular volatility index, in traditional markets, is VIX, that estimates anticipated volatility of the S&P500.

Ethereum Price History

The price of Ethereum has changed fiercely in its short history. Since its launch in July 2015, the price of Ethereum native token – Ether – was $0.43. In the following years, the price of Ethereum would see a high of $1,432.88 in January 2018 preceding dropping by over 80% 9 months later.

Image Source: CoinMarketCap

The dramatic volatility pulled in worldwide attention with the established media running close reports on Ether price performance.

The exposure created has been a significant boon for the ecosystem, attracting a great many new developers and business ventures alike.

In 2018, the sum raised through Ethereum-empowered ICOs came to nearly $8 billion, increasing from only $90 million in 2016.

Where the Ethereum price has faced outrageous volatility over the years, it is this volatility which has driven interest. After each wins and fail cycle, Ethereum comes out the opposite side with a fundamentally stronger platform and a more extensive developer network backing it.

These key enhancements would propose a positive long-term point of view toward the price of Ethereum.

How is Ethereum’s Volatility Measured?

Ethereum volatility is calculated by ETH Volatility Index, which is usually based on the standard deviation of the regular ETH/USD open price, for the past 30/60 days.

This is broadly seen as one of the most powerful methods for measuring an asset’s volatility when using past historical data only.

A significantly more precise approach would utilize the ‘Implied Volatility’, that is a by-product of alternatives trading.

Nonetheless, cryptocurrency options exchanges still have to become more liquid.

Long-Term Ethereum Options

As with many investments, buying cryptocurrency like Ethereum requires some prior due diligence. Ethereum’s low volatility shows that options markets don’t anticipate any critical catalysts for either bull or bear cases.

Short-term options show intense bearish activity, while September and December markets are bullish.

However, low volatility doesn’t really imply that investors anticipate a price upswing or downswing. It simply reflects the reduced anticipations of significant price catalysts.

There have already been a few bullish indicators for Ether, with the one increasing user activity as well as surging institutional demand.

For those ready to benefit from the possible gain of Ethereum 2.0, this is the right time to purchase longer-term call alternatives.

Ethereum price volatility comes with significant risk in itself. Relieving avoidable risk is the key to offering the best chance of a positive return for the investors, especially when it comes to Ethereum to INR.

This asset is one of the most volatile as well as exciting of all.

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