- The crypto market recently experienced a significant flash crash.
- Narratives have become the main influencer of crypto market trends.
- Derivatives trading is gaining prominence in the cryptocurrency market.
Renowned cryptocurrency analyst Michael van de Poppe has identified the key factors that traders should consider when managing altcoin portfolios. Van de Poppe made the latest analysis in a podcast following the recent crypto market flash crash, which triggered massive volatility across all major cryptocurrencies, with Bitcoin declining over 10% within 24 hours.
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According to the analyst, cryptocurrencies are by far the most volatile assets compared to other tradable instruments, including stocks, forex, and gold. For instance, while the other instruments have average monthly volatilities of less than 10%, Bitcoin’s data shows that the cryptocurrency has a 30% average volatility rating, while altcoins boast a close 25%.
Narratives move the crypto market
In the meantime, Van de Poppe has spotted an emerging narrative in the digital assets market involving derivatives. Focusing on the DEX protocol, the analyst noted that crypto assets linked to DEXs are experiencing a boost in volatility ratio. He believes the rallies experienced by most cryptos in this category are based on the emerging narrative rather than the projects alone.
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Focusing on the broader cryptocurrency market narrative, Van de Poppe highlighted a pattern that could influence crypto traders’ decisions when considering digital assets in groups. For instance, he noted that variations in the movement of similar crypto prices required the pair to close such price gaps. Hence, the rallying token would often retrace toward the range of the subdued one or vice versa.
Always keep a watchlist
Meanwhile, the renowned crypto analyst emphasized that traders need to pay attention to the prevailing narrative, as that is what moves the trend in the current era. However, the analyst recommended that crypto traders should always keep a watchlist of tokens they can add to their portfolio as a trading principle.
Van de Poppe considers keeping a watchlist a crucial requirement, considering the crypto market’s dynamic nature. Such watchlists enable traders to remain a step ahead and guard against potential pitfalls arising from missed opportunities.
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Source: https://coinedition.com/crypto-analyst-describes-how-to-trade-the-narrative-influenced-altcoin-market/
