February 28, 2025 Welcome back to our blog, where we aim to equip traders and investors with the knowledge needed to understand the crypto world and how to master the markets with our wide range of advanced crypto bots.
With 2025 expected to be a year of high volatility, today’s post will explore the concept of volatility and explain the hype.
We’ll start by answering basic questions about volatility, including what it is, how to measure it, and what it affects. Then, we’ll discuss some of the reasons it has spiked recently.
As usual, we’ll wrap things up by connecting it all to automated crypto trading and present some of the recommended steps traders should follow in volatile times.
Before we proceed with our busy itinerary, this is to remind you that the information in this blog post is intended solely for educational purposes and should not be considered a call to action or any other kind of financial advice. Traders must consider their economic status and risk tolerance before employing any crypto trading strategy. Crypto trading involves inherited perils, research, and trading at your own risk.
In the crypto world, volatility is a statistical measurement that helps traders assess the size and frequency of token price movements. Simply put, it tells us how the price fluctuates around its moving average over a specific period.
Generally speaking, each financial asset has its own inherited volatility. For example, cryptos are usually considered more volatile than traditional assets like crude oil or precious metals. There are also some discrepancies within the crypto world, meaning some tokens are more volatile than others. Whenever an asset’s volatility shifts from its baseline levels, it indicates that our trading environment has also changed.
When prices have the potential to be spread out over a wide range of values, it’s considered a time of high volatility. Vice versa, when prices show stability and the potential for significant price fluctuations is relatively low, it’s viewed as a low-volatility market condition.
While both good and bad news can cause a spike in volatility due to a sharp movement in prices, volatility rises without a significant upswing or downswing in price itself is seen as neither a bullish nor a bearish sign but rather as an indication of uncertainty in market sentiment.
Measuring volatility and how it changes helps traders gauge the probability of potential fluctuations in the price of a token. However, it doesn’t give us any indication about the future direction the market is heading in. So, whenever we speak about volatility, it’s not a prediction that the market will be heading up or down but rather an indication of the current trading environment and the potential risks or rewards it entails.
As we’ll see later, while traditional investors often associate high volatility with elevated levels of risk, in the fast-paced world of automated crypto trading, times of increased volatility could be the most lucrative to be active in the markets.
As we said before, when we measure the volatility of a specific token, we measure the dispersal of prices around the token’s moving average.
While there are several different methods for performing this calculation, two technical indicators are very popular for gauging cryptos’ volatility.
The first is Bollinger Bands. This indicator calculates standard variations to create the top and bottom, at which prices are expected to fluctuate.
The second is the Average True Range. In short, this indicator measures volatility by calculating it using only the highest and lowest pricing points.
While these two indicators will produce similar estimations at low volatility times, their results can vary at high volatility times. For this reason, it’s highly recommended that they be used at all times to get a more accurate picture of the current state of volatility in the markets.
Like the prices of all other financial assets, the prices of crypto tokens are heavily dependent on their future outlook. Any potential development that obstructs our ability to make accurate predictions can increase volatility.
While each specific crypto project has news and developments that can induce volatility, like system upgrades and halving events, some general factors affect the entire crypto ecosystem.
A partial list includes:
With the crypto markets showing increased volatility in 2025 so far, let’s use what’s happening now in the crypto world as a case study to demonstrate what we just went through.
For that, we’ll focus on the biggest economy in the world, the United States. As the most dominant financial force, what’s going on in the U.S. can potentially disrupt global financial markets, cryptos included, for better or worse.
Many things happen if you haven’t followed the news since the U.S. elected a new president. There is at least enough deliberation to give bullish and bearish crypto speculators good arguments to support their stance.
With a lot of big money behind each position, they create a volatile trading environment that swiftly changes from euphoria to despair, dragging the rest of the crypto world and other financial markets into it.
On one side of the coin are the optimists. To them, the U.S. is genuinely interested in resolving armed conflicts worldwide and promoting more peaceful times, most notably in the Middle East and Europe.
On more crypto-specific news, the new administration is the most pro-crypto government the U.S. has ever had, with even President Trump dabbling in the crypto world firsthand. This, along with the appointment of a strong crypto enthusiast to regulate the crypto industry and some exciting rumors about creating a national Bitcoin reserve, is sparking hope among crypto investors for a bullish trajectory for cryptos in the short and medium term.
These positive developments boost demand and attract new inflows to the crypto world, supporting current market price levels and occasional upswings.
Now, let’s discuss the other side: selling pressure. Pessimists have strong arguments to support their stance.
To begin with, the U.S. plans to impose tariffs on imports from some of the biggest economies on earth, like China, Canada, and Mexico, are raising concerns that these levies would disrupt supply chains around the world and reignite inflation, which Western economies have struggled with in the past couple of years.
On top of this potentially devastating spike in the cost of living, some other ideas that were recently suggested by Trump and associates, like expanding its territory to different regions like the Gaza Strip, the Panama Canal, Greenland, and once again, Canada, are also adding another layer of uncertainty to any future predictions.
With the US administration’s initiatives and developments changing daily, it’s safe to assume that some more volatile times are ahead. The crypto markets will continue to fluctuate and eventually find their equilibrium between bullish and bearish traders.
That, in a nutshell, is our short and overly simplified summary of what’s happening in the crypto world and other financial markets.
Market sentiment is unclear, as abundant positive and negative narratives can develop unpredictably. As sentiment swiftly changes from pessimism to optimism and everything in between, crypto traders must know how to tame volatility to their advantage.
While volatility is considered a risk factor by many traditional investors, the advanced capabilities of crypto trading bots can also transform these challenging trading conditions into lucrative opportunities. Furthermore, in some cases, this is when they produce the best results.
Our Signals Bot, TradingView Bot, DCA Bot, and Grid Bot are ideally suited for the challenging and intense requirements of trading successfully in times of high volatility. Let’s focus this time on some advanced features and other practices traders can adopt.
First, a popular rule of thumb is considering less conservative triggers for take-profit, stop-loss, and trailing stop-loss. This could minimize the risk of false alarms that will take us out of trades too soon, preventing us from exploiting our bots’ full potential.
Although leverage offers excellent rewards, it is also closely linked to more substantial risks. Therefore, many experts recommend readjusting your leverage preferences when volatility rises. While our bots come with built-in settings, such as automated configuration leverage adjustments, to assist you in managing your risks, it could be wise for traders not to use cross margins when risks are more imminent.
In addition, Cornix’s crypto trading bots are packed with advanced features like hedge mode, stop-loss timeout, smart position sizing, and more. Together, these features give crypto traders the proper tools to generate consistent profits at inconsistent times without taking unnecessary risks.
With the crypto market expected to display high volatility in the foreseeable future, crypto traders must always stay on their feet. However, as we see today, this challenging trading environment can easily be transformed into a lucrative trading experience with the proper tools.
At Cornix, we offer a comprehensive package that covers everything crypto traders need to achieve financial independence by navigating the volatile crypto seas.
This includes our Signals Bots, DCA Bots, TradingView Bots, Grid Bots, and other advanced complimentary trading tools, such as demo trading, backtesting, portfolio trackers, trading terminals, and more.
If all of that sounds too much to chew on, don’t worry. Thanks to our flexible pricing plans, including a free option, you can pay only for what you need—no need to take our word for it. You are welcome to check out our two-week, no-strings-attached free trial that allows you to test the waters firsthand and experience the true power of automated crypto trading.
