Look to Liquidity to Outsmart Crypto Volatility

by Juan Villaverde
By Juan Villaverde

In the world of cryptocurrency, volatility isn’t just expected. It’s the norm.

Since diving into this world in 2016, I’ve seen firsthand how the crypto market can simultaneously thrill and terrify newcomers.

Think of it as a roller coaster. And this ride doesn’t just go up and down. Sometimes, it does loop-de-loops.

Here’s a truth bomb: The cryptocurrency market has an average annualized volatility rate of 70%. This means that, while you can experience skyrocketing highs, the lows are just as dramatic.

It's the best-performing asset class in history, but those gains aren't for the faint-hearted. Remember, no risk, no reward.

What drives this frenetic market?

Liquidity.

Like tech stocks, crypto is forward-looking and sways with the liquidity tide. Despite the current correction, nothing fundamental about cryptocurrency’s adoption or market cycle suggests a lasting downturn.

That means this dip is just part of the expected 320-day-cycle corrections, nestled within a broader bull market.

That's why I see these downturns not as disasters but as golden opportunities. If you view these dips as a chance to beef up your portfolio, you’re playing the game right.

Currently, the crypto market is mirroring the stock market and gold, all of which are heavily influenced by global liquidity fluctuations. Despite the Federal Reserve’s tightening to fight inflation, there’s chatter about that position loosening on the horizon.

That, combined with Treasury Secretary Janet Yellen’s dance with short-term bond issuances, sketches a liquidity landscape that's about to get interesting.

In short: The long-term liquidity trend is clearly UP and will remain so for the foreseeable future. And for crypto, adding liquidity is like squirting lighter fluid on the barbeque.

So, don’t get too caught in uneasy feelings regarding the current state of the market.

Remember, this is classic crypto behavior. It’s a cycle that demands patience and a bit of nerve.

The market will fluctuate in the short term. But we’re in a bull cycle, so the overarching direction for the market remains bullish.

Use this time to gear up, not freak out. The storm will eventually clear, and those poised to capitalize on the ensuing rally will likely thrive in the aftermath.

So, buckle up, keep your eyes on the horizon, and maybe — just maybe — enjoy the ride.

Best,

Juan Villaverde

P.S. While I deal primarily in the crypto markets, I do want to let you know of an exciting opportunity over on the TradFi side.

My colleague and Weiss Ratings founder Dr. Martin Weiss just revealed what he’s calling the biggest technological breakthrough in his 53-year career.

It’s a brilliant new stock trading system that combines the power of AI technology and the Weiss ratings. And after a decade of testing, including real-time testing, it beat the S&P 500 by almost 51-to-1.

And that 10-year timeframe includes some of the best of times … and some of the worst.

The liquidity trend will benefit the TradFi markets just as with crypto. And this tool could be the ticket to helping you ride that roller coaster, as well.

So, I urge you to watch Martin’s latest briefing. In it, he explains how this exciting technology works. And he reveals the ten stocks it’s already marked as a “buy.”

About the Editor

When econometrician and pro trader Juan M. Villaverde first applied his algorithms to Bitcoin years ago, he discovered a regular cyclical pattern. And he has since used it to build the world’s first crypto timing model based on cycles. Thanks to his analysis, the Weiss Ratings team has accurately picked the top and bottom of major crypto booms and busts.

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