Ripple twice as volatile as bitcoin and Ethereum

Chris Stead 15 February 2018

Volatility Compared Lead

Volatility compared! The three big cryptocurrencies take up 65% of the total market cap between them, but two of them are far less volatile than the third.

Over the last two months, the volatile nature of the cryptocurrency industry has been all too evident. A burst of interest through December and over the New Year led to a huge boom in the value of many cryptocurrencies. However, a correction after that was just as dramatic. The big three – bitcoin, Ethereum and Ripple – each recorded an all-time high before diving up to 80% of their value.
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But which of the three has been the most volatile? By volatile, we refer to the average change in value – up or down – over a 24-hour period, and also the amount of stretch – as in the daily high and daily low – within that 24-hour period. By analysing this data we can arrive at a figure that allows us to look at the different cryptocurrencies with volatility compared.

Volatility compared: Why is it important to know?

Knowing the volatility of a cryptocurrency gives you vital information. Through this, you can get a read on how much attention any trade in that coin or token will require in order to make a consistent profit. The higher the volatility, the more attention must be paid if you are going to look at selling on highs and buying on lows. In addition, these cryptocurrencies are going to be the most significantly impacted by whales and other traders setting significant buy and sell limits on their trades.

When compared to other trade options such as FIAT currencies, gold and shares, the volatility of a cryptocurrency is high – at least in the industry’s relative infancy. But as noted in our analysis of the top 20 most volatile cryptocurrencies, between the coins and tokens there’s a large difference in volatility. So who then, of the big three, is the most volatile?

Volatility compared: Results

When we looked at all the trades registered on CoinMarketCap between December 8 and February 8 – a range that took into account the huge January rise and fall of the market – the race for “least volatile” was tight. Bitcoin proved to be the least volatile, indexing at 11.59. Ethereum followed closely with an index of 13.56. But it was Ripple that was considerably more volatile, indexing at 23.78. Ripple is more than twice as volatile as bitcoin and almost twice as volatile as Ethereum.

For the record, from our research, the average across the top 50 coins (based on market capitalisation) was a volatility index of 21.03. This shows that Ripple was more volatile than the average top 50 cryptocurrency.

Does this mean that Ripple is a bad investment? Not at all: it’s simply a measure to show you that the daily rollercoaster ride when looking at Ripple vs bitcoin vs Ethereum is more thrilling with the former. For those able to capitalise on each rise and fall, it provides the biggest opportunity to make a profit. However, if you’re more interested in investing in a cryptocurrency and then holding on for the long term, you may want to opt for bitcoin or Ethereum, or at least one of the other options from the top 20 most stable cryptocurrencies.

This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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