Apart from representing a groundbreaking technology that is bound to change the world of finance, the cryptocurrencies attract flocks of retail traders and institutional investors with their volatility capacities that promise significant returns even on a relatively modest investment.
Just a quick reminder that price volatility means a standard deviation of returns from a given digital asset. In simpler terms, high volatility implies that the price is moving in large swings to the upside or to the downside, which bear potential profits as well as significant risks. Low volatility, on the other hand, suggests much calmer and predictable price fluctuations that make it safer to hold a cryptocurrency or gather a large trading position, since the market conditions are stable, but also limits the opportunities for profit-making.
Medium volatility is considered the most appropriate option for fruitful trading because it is usually associated with decent price swings within the framework of an established trend.
However, knowing the volatility percentage alone isn’t sufficient for an accurate price prediction of ICON as it doesn’t reflect other crucial aspects of price formation, such as crowd sentiments, fear in particular, which, as even a nascent trader knows, is one of the two main drivers - along with greed - of asset prices.
In the 1950s, a renowned economist Harry Markowitz suggested that volatility, and the implied risk, must be taken into account when assessing the performance of a stock or a bond - in our case, it’s ICON - and calculating the expected returns. This idea brought him a Nobel Prize, by the way. For some time, the brightest academics and traders had been building a way to measure volatility and the expectation on the part of the crowd, which resulted in the introduction of the Crypto Volatility Index (CVIX), which also became known as Fear Gauge, by the Chicago Board Options Exchange (CBOE) that offers options on top indices and stocks. CVIX measures market expectations with regard to volatility and price movement on the basis of a ration of call and put options on S&P 500, a fundamental stock market index that reflects the performance of the 500 largest US corporations, such as Apple (AAPL), Google (GOOGL), and Facebook (FB).
Options are a form of derivatives that allow traders an opportunity to purchase or sell an asset at a strike price within the designated time frame. When a trader wants to buy the asset, he obtains a call option contract. Conversely, getting a put option means that the holder wishes to sell the asset since he fears that it would depreciate in value substantially.
The Crypto Volatility Index takes into account the overall amount of options on a particular asset and the ratio between put and call options to gauge the sentiment among market participants effectively. The prevalence of put options means that holders fear that the price would decrease sharply within the next 30 days, the period of expiration of options contract, and vice versa. Therefore, the Crypto Volatility Index hints at the probable extent of price fluctuation over the coming month (the forward-looking volatility) and is indispensable for the diligent price analysis and forecasting.
After some adaptations, CVIX now enjoys wide acceptance in the cryptocurrency market, along with Forex, stocks, and indices markets, because it combines the showings derived from the traditional market (mainly S&P 500) and the market of cryptocurrency derivatives that has been developing in strides over the years. The behavior of the S&P 500 index has become crucial for the cryptocurrency market due to the increasing correlation with Bitcoin, the dominant cryptocurrency that exerts immense influence on the price of alternative coins.
The Crypto Volatility Index is a principal instrument of our ICON price prediction model, together with the thorough fundamental analysis and the assessment of price action on multiple time frames, candlestick patterns, and readings of all key indicators, such as Bollinger Bands and Average True Range that also deal with volatility, and moving averages.
Right now, the Crypto Volatility Index with regard to the ICON price stands at 25, which is a modest value, meaning that traders are to expect some swings to the upside or the downside but without any disruptive changes of the overall trend structure. Evidently, this is the most opportune time to profit in the ICON market by exploiting your skills as a swing trader while still being able to flow with the trend.
The present price of ICON is $0.432119 that marks the 7.72% change on the day; 7.81% over the previous month; 93.66% during the past year. The average trading volume of ICON stands at $241 900 068, subject to moderate changes in the coming weeks. Having conducted the all-encompassing analysis of CVIX readings and other crucial indicators, we reached the conclusion that the ultimate price target for the day stands at $0.490796, which is the 13.58% fluctuation from its current standings.
