What is crypto market volatility?

Crypto market volatility refers to rapid and unpredictable changes in the cryptocurrency market, affecting various crypto coins, such as Bitcoin and Ethereum.

In 2021, for example, we saw steep declines and quick climbs for this asset class. The Alto CryptoIRA® transaction volume on our platform was about three times the monthly norm, and buy orders outnumbered sell orders by roughly 4:1. The size of the “sells” far exceeded the size of the “buys,” which told us many long-term investors may have been using the price movement as an opportunity for dollar-cost averaging, an investment strategy often employed to reduce volatility and poorly-timed lump sum market entry. Many crypto investors have come to expect significant volatility.

Market volatility highlights the importance of portfolio diversification, a proven tool to reduce volatility and increase returns over the long term. Diversification is central to why we created Alto. Everyone—not just professional investors—needs access and opportunities to grow their retirement funds in a broad and balanced way.