Liquidity is the ability to buy or sell an asset quickly, without causing significant price fluctuations. Learn more here.

Liquidity is the lifeblood of efficient crypto trading. It determines how quickly and smoothly assets can be bought or sold at stable prices. And yet, many traders tend to overlook liquidity’s role in reducing 

, tightening spreads and improving execution speed — all of which directly impact profitability.

Bybit has made significant strides in improving liquidity across its trading pairs, ensuring that traders benefit from faster execution, better pricing and minimal market impact across both spot and derivatives markets. This article will explore what liquidity is, why it matters, how to measure it — and why Bybit offers one of the most liquid trading environments in the industry.

Liquidity is the ability to buy or sell an asset quickly, without causing significant price fluctuations. In crypto trading, liquidity is determined by trading volume, order book depth and market participation. A highly liquid market ensures tighter spreads, faster order execution and reduced slippage, providing a more stable and efficient trading experience.

. When many buyers and sellers actively place orders, transactions occur swiftly and price movements remain stable. Conversely, a lack of liquidity can lead to price gaps, delays and higher trading costs.

A deep order book is key to strong liquidity, with large quantities of buy and sell orders spread across multiple price levels. This means that when a trader places a large order, it’s absorbed by the existing orders, without drastically moving the market price. In contrast, an illiquid market has fewer participants and a shallower order book, so that a single order for an asset could drastically shift its price. This leads to greater price volatility and higher execution costs.

 play a crucial role in maintaining liquidity by continually placing buy and sell orders. By providing a steady flow of orders, they help stabilize prices and narrow the 

, ensuring smoother trading conditions for all participants.

In crypto trading, liquidity also varies between 

. Spot liquidity is reflected in lower spreads, meaning traders can buy or sell assets at more competitive prices. In contrast, lower slippage is the key measure in derivatives trading.

Liquidity has an impact on every aspect of trading, from execution speed to profitability. The following considerations make liquidity a key factor for traders.

A tighter bid-ask spread ensures traders 

 at fairer prices. This is especially beneficial for 

 who rely on small price movements for profits.

Minimal slippage and better price stability

Liquidity determines the degree to which an order affects price levels. In a highly liquid market, a $100,000 trade might move an asset’s price by only a fraction of a percent, while in an illiquid market, the same trade could cause a sharp price swing.

Liquidity allows traders to execute orders almost instantly at the expected price. In contrast, low-liquidity conditions may mean that, due to market fluctuations, orders will take longer to fill, or may execute at unfavorable prices.

During sudden price movements, a deep order book absorbs large trades, preventing extreme spikes or crashes. This is crucial for maintaining price stability in volatile markets: traders can execute strategies with greater confidence, knowing that price fluctuations will be more controlled.

How to identify and measure liquidity in crypto trading

While many traders assume liquidity is measured simply by trading volume, a deeper analysis is required to assess true liquidity conditions. The following section explains how traders can evaluate liquidity effectively.

A deeper order book means that multiple buy and sell orders exist across different price levels, supporting efficient trade execution with minimal price movement This is a strong indicator of liquidity, since it reflects a market’s ability to handle both small and large orders without sudden price fluctuations. 

 pair on Bybit has consistently shown strong order book depth, with the top three bid and ask levels holding significantly higher quantities as compared to other platforms. This enables smoother execution for all traders, from retail investors to institutions. 

A true test of liquidity is the degree to which the market price moves when executing a large order. In a highly liquid market, trades are absorbed across multiple levels, ensuring minimal slippage and price disruption. 

Traders can simulate a large market order by entering a significant trade volume and observing how much the price shifts before execution. A market order that significantly changes the last traded price suggests lower liquidity and potential inefficiencies in trade execution. 

For example, in order to move an asset’s price from $1,877.64 to $1877.66 on Bybit, you’ll need to buy 57.02856 + 168.67890 + 26.21569. Likewise, in order to move the price from $1,877.63 to $1,877.60, you’ll need to sell 114.28408 + 16.35036 + 17.30490.

Order absorption measures how well a market handles large trades without causing price spikes or slippage. A highly liquid market has deeper buy and sell walls, allowing it to process large transactions smoothly.

Here’s an example: For Bybit’s ETH/USDT pair, large trades require consuming multiple price levels before affecting the last traded price. This ensures stability even during high trading volumes. A trader purchasing 30 ETH only absorbs Level 1 and Level 2 sell orders, whereas on lower-liquidity platforms, multiple levels would be affected, increasing price volatility.

This high order absorption capacity is vital for traders executing large transactions, ensuring consistent execution quality across all market conditions.

The bid-ask spread represents the difference between the highest bid price (what buyers are willing to pay) and the lowest ask price (what sellers are willing to accept). A narrower spread indicates stronger liquidity, because it means there are many active buyers and sellers competing for the best prices. Conversely, a wider spread suggests a more illiquid market, leading to higher trading costs and greater price fluctuations.

The first consideration is to compare the order book depths between different exchanges. Exchanges with higher quantities at each price level (for both bid and ask) suggest higher liquidity.

Step 1: Identify the initial market price

Step 2: Simulate a market order (without executing it)

Step 3: Calculate the final execution price

Step 5: Compare the market impact between exchanges

Bybit’s approach to liquidity: Building the best trading experience

Bybit has implemented advanced liquidity solutions to ensure traders experience tight spreads, fast execution and minimal slippage.

One of Bybit’s most significant advancements is its Retail Price Improvement (

) Order, a first-of-its-kind feature designed to enhance liquidity specifically for retail traders. Unlike traditional market-making models, which oftentimes prioritize institutional orders, RPI orders provide retail traders with access to deeper liquidity pools, ensuring better prices and deeper order book support.

Bybit has also strengthened its liquidity infrastructure through strategic partnerships with institutional liquidity providers. These collaborations increase market depth, reduce slippage and improve overall trading efficiency across both spot and derivatives markets.

The impact of Bybit’s liquidity innovations

Following the introduction of RPI orders and enhanced market-making strategies, Bybit has seen substantial improvements in liquidity across key trading pairs. The results are clear:

Bybit’s liquidity enhancements have created a more efficient and stable trading environment, benefiting both retail and institutional traders.

For retail traders, Bybit’s liquidity improvements mean faster order execution, lower trading costs and better pricing. By ensuring better liquidity conditions, Bybit makes it possible for traders to execute their strategies with greater confidence and efficiency.

For high-volume and institutional traders, deeper liquidity pools ensure that large orders can be executed without significantly moving the market price. This is crucial for traders managing large portfolios or executing algorithmic trading strategies.

Bybit’s liquidity solutions also enhance overall market efficiency, improving execution quality across all trading pairs.

Liquidity is the backbone of efficient crypto trading, shaping everything from execution speed to price stability. Bybit has consistently demonstrated its commitment to providing a highly liquid market through innovations like RPI orders, deep order book depth and strategic partnerships with institutional liquidity providers.

Whether you’re a retail trader seeking tighter spreads and faster execution or an institutional trader executing large orders with minimal price impact, Bybit will offer you a best-in-class trading experience. 

If you value fast execution, minimal slippage and a robust liquidity environment, Bybit is the exchange of choice.

Intermediate

liquidity.png

Liquidity in crypto trading: Why it matters and how to spot the best conditions

Miracle Play (MPT) is a multichain esports platform using AI agents to enhance gameplay, ensuring fairness, transparency, and new monetization opportunities.

Artificial intelligence (AI) is quickly gaining traction across numerous industries, including blockchain. One area where AI is making its undeniable impact is in the niche of esports, a sector that’s also experiencing an impressive boom of its own. As of early 2025, AI technologies like 

 and game-enhancing AI algorithms are being increasingly used in esports gameplay and competitions, both in traditional Web 2.0 environments and on blockchain.

 project that’s part of this trend is Miracle Play, a blockchain-based gaming universe that leverages AI to enhance players' game outcomes and decision-making abilities. Miracle Play uses blockchain technology to ensure transparency and fairness in 

 and tournaments. Additionally, AI agents on the platform enhance the gaming experience by providing real-time assistance to players, optimizing game strategies and influencing in-game decisions to improve overall performance.

Players can join Miracle Play gaming universes based on several popular 

 blockchain networks. Additionally, there's the Layer 3 Miracle Chain network, which maintains connectivity to these blockchains and is used for asset and gaming data transfers.

At the end of March 2025, the project expects to turn an important page in its history by moving from its original version, Miracle Play 1.0, to a significant upgrade, Miracle Play 2.0 APEX, which will make the in-game use of AI agents the cornerstone of its functionality.

 (MPT) is a decentralized multichain gaming platform that lets users create and join esports tournaments, and supports the use of AI agents in gameplay. 

Miracle Play users can leverage AI agents to enhance their decision-making and, ultimately, their gaming outcomes. 

Miracle Play’s blockchain technology offers users a transparent and fair environment in which to participate and creates unique monetization opportunities that traditional Web 2.0 gaming solutions typically lack. Using a system of 

, Miracle Play ensures that rewards for gaming achievements are distributed fairly, quickly and automatically.

Along with its own gaming-focused Layer 3 chain, Miracle Chain, the platform also lets users create and join competitions on several blockchain networks. These include major blockchains like 

 (ARB). As of early 2025, the project is also in preparation to launch on 

 (SOL). Miracle Play's bridging solution, Miracle Multi-Chain Bridge, allows the easy and efficient transfer of assets and data between the Layer 1, 2 and 3 blockchains within the platform's ecosystem.

By easily joining competitions on the various networks supported by Miracle Play, users earn rewards and progress through a tiered league system with three levels: General League, Premium League and Platinum League.

Work on the original Miracle Play platform, now called Miracle Play 1.0, started in 2023. The original version introduced a multichain esports gaming experience, but largely lacked the distinct AI features that the platform now boasts. Throughout mid to late 2023, the project introduced a series of beta versions and integrated some of the blockchains on which it runs.

In early 2025, Miracle Play announced a move to version 2.0, Miracle Play 2.0 APEX, which features the tight integration of AI technologies, mainly in the form of game-enhancing AI agents. Per the project's public communications, a complete move to Miracle Play 2.0 APEX is scheduled for Mar 31, 2025. On this date, the original Miracle Play 1.0 platform will be retired entirely, and 2.0 APEX will handle all of the esports activity on the platform.

In February 2025, the platform also announced the introduction of its first AI agent-powered game, 

, which features adaptive AI racers and NFT-based racing car ownership, as well as AI-vs.-AI and AI-vs.-human game modes.

Miracle Chain is Miracle Play's purpose-built Layer 3 chain. It offers players a highly efficient environment in terms of costs and performance, and facilitates customizable tournament features, such as automating match rules and reward distributions. The chain was developed using the Arbitrum Orbit development framework, and uses the Arbitrum One Layer 2 network for transaction settlement. As noted earlier, Miracle Chain can also interact with the other blockchains within the platform’s ecosystem using the Miracle Multi-Chain Bridge.

Miracle Nodes are a critical component of the Miracle Chain. They use advanced data storage, retrieval and management to help maintain the platform's stability and operations, employing the IPFS decentralized storage solution to store game data and metadata. Miracle Nodes also monitor the network's transactional activity. In turn, they receive rewards in MPT, the platform’s native cryptocurrency, for their work in maintaining the stability of the network.

Initially, maintaining network operations and governing the platform was entrusted to holders of Miracle Play NFTs (MPNs). Starting in September 2024, the oversight of the platform’s operations was transferred to the newly introduced Miracle Nodes. Holders of MPNs received special NFTs, Node Key NFTs, which they could use to obtain a license, and then stake to activate a Miracle Node and earn rewards from it.

 (dNFT) technology, which allows token holders to update NFT assets dynamically as they attain various rewards and achievements. dNFTs are represented on Miracle Play in the form of Miracle Club NFTs (MCNs). An MCN is issued upon creating an esports club, and records the club's achievements and properties. MCNs can also be used for staking to earn MPT tokens and accumulate rewards earned by the clubs.

Miracle Play’s MPT token has been issued, primarily in the 

 format, on all the chains on which Miracle Play is available. MPT serves several functions on the gaming platform: 

MPT is a supply-capped token with a maximum supply limitation of 3 billion. Allocation shares for the entire supply are shown in the chart below.

As of the time of this writing (Mar 17, 2025), the MPT token is trading at $0.021, with a market cap of $17.98 million.

Utilizing a combination of AI and blockchain technologies, Miracle Play aims to completely change the way the web3 gaming industry operates. With the introduction of 2.0 APEX, the project's AI-powered esports initiative, the team behind Miracle Play hopes to attract more users — both players and game developers — to its multichain ecosystem.

Miracle Play has already made serious progress by offering a fair gaming environment in which smart contracts enforce rules and distribute rewards equitably. Miracle Play’s 2.0 APEX version should further boost the project’s standing and improve community engagement by introducing something that few esports platforms can currently offer — intelligent AI agents that serve as your companions and assistants in the fiercely competitive world of esports tournaments. 

Miracle Play.png

Miracle Play (MPT): The AI-driven future of web3 gaming tournaments

The TON Foundation announced that Telegram founder Pavel Durov has regained his passport from French authorities, allowing him to travel freely.

Daily top performer — Heroes of Mavia (MAVIA)

The S&P 500 fell 2.3% last week, its fourth straight decline, amid tariff concerns and recession fears. Investors await retail sales data and the Fed’s rate decision, while Nvidia’s CEO prepares for the GTC AI conference. Gold trades near $2,985, driven by trade war tensions, a weaker U.S. dollar, and geopolitical risks. Market focus shifts to U.S. retail sales data for further direction. CoinDesk Indices, which tracks the broader crypto market, fell 1.44% in the past 24 hours, while Bitcoin and Ether gained 0.76% and 1.02%, respectively. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today's top performer is MAVIA, up 164.2% after Heroes of Mavia unveiled GameLink for cross-game asset trading.

Heroes of Mavia (MAVIA), launched on February 6, 2024, is a blockchain-based multiplayer strategy game by Skrice Studios. Players build bases, train troops, and battle to earn resources and RUBY, the in-game currency. The game integrates Web3 technology and follows a play-to-earn model. 

 a Digital Asset Exchange Platform (DAEP) for cross-game NFT and token trading. The beta launches on April 25, 2025, replacing MPEX, with Ruby 1.0 converting to Ruby 2.0 at a 10:1 ratio. Six flagship games, including an optimized Mavia, will debut on GameLink, enhancing its gaming ecosystem. The team is restructuring to improve execution, with regular updates to follow.

Check out the latest prices, charts, and data of 

 that Telegram founder Pavel Durov has regained his passport from French authorities, allowing him to travel freely. The foundation emphasized its commitment to free speech and privacy, aligning with Telegram’s mission to protect communication rights. TON reiterated its belief in blockchain as a tool for personal freedom and expressed gratitude to the community and supporters who stood by Durov.

Check Out the Latest Prices, Charts, and Data of 

BTC Spot ETFs saw $911.4M in net outflows over the past week, with GBTC losing $80.6M and non-GBTC funds seeing $830.8M in withdrawals. The largest single-day outflow was on March 11, totaling $371M. Since inception, BTC Spot ETFs have recorded $35.3B in net inflows, with GBTC down $22.5B while non-GBTC funds have gained $57.8B.

, a DeFi infrastructure project backed by $3.5M in funding, has launched its points program, potentially leading to an airdrop. Users can earn points by completing free tasks via an EVM wallet. Optional tasks include minting an NFT for 0.0009 ETH or depositing 50 USDC to activate the Arma Agent, with funds withdrawable at no cost.

Beginner

1.png

TON Foundation supports Pavel Durov's regained travel freedom

Some of the best indices to trade on Bybit Gold&FX include SP500, DJ30, CHINA50 and GER40. Learn more about them here.

Index trading exposes investors to entire market segments through a single instrument, providing efficient diversification and liquidity. This comprehensive guide explores the 18 best indices available on 

, examining their characteristics, specifications and advantages for traders of all experience levels.

 are standardized measurements that track the performance of specific groups of securities, such as stocks within a certain industry, country or market segment.

Rather than purchasing individual stocks, traders can use indices to gain exposure to the overall performance of a market through a single position.

 in the form of contracts for difference (CFDs), allowing traders to speculate on the price movements without owning the underlying assets. Let's examine the best indices available on the platform.

The Standard and Poor's 500 (S&P 500) is one of the most widely followed equity indices globally, tracking the performance of 500 large-cap US companies across various industries. As a market cap–weighted index, it represents approximately 80% of available market capitalization in the US equity market.

Trading the SP500 CFD on Bybit Gold&FX provides exposure to the overall health of the US economy, with a maximum leverage of 500 and a maximum lot size of 1,500. The index experiences consistent liquidity and moderate volatility, making it suitable for both 

The Nasdaq-100 tracks the performance of 100 of the largest nonfinancial companies listed on the Nasdaq Composite. It's heavily weighted toward technology, with significant exposure to companies like Apple, Microsoft, Amazon and Alphabet Inc., making it a tech-focused alternative to broader indices.

On Bybit Gold&FX, NAS100 is denominated in USD, with a maximum leverage of 500 and a maximum lot size of 1,500. Its tech-heavy composition makes it particularly sensitive to technological developments and corporate earnings in the tech sector.

The Dow Jones Industrial Average (DJIA)  is one of the oldest and most recognized stock market indices. It comprises 30 large publicly owned companies based in the United States. Unlike the market cap–weighted S&P 500, the DJIA is price-weighted, meaning higher-priced stocks have a greater influence on the index.

Trading the DJ30 CFD on Bybit Gold&FX gives you exposure to blue chip companies, with a maximum leverage of 500 and a maximum lot size of 500. Its smaller composition makes it easier to track component movements and understand what's driving price action, making it popular among both novice and experienced traders.

The FTSE China A50 Index represents the performance of the 50 largest A-share companies listed on the Shanghai and Shenzhen stock exchanges. It provides concentrated exposure to China's domestic economy, including sectors like finance, industrials, consumer goods and technology.

Trading the CHINA50 CFD on Bybit Gold&FX offers a direct route to participating in the world's second-largest economy. The index responds strongly to Chinese economic data, regulatory changes and monetary policy shifts, with a maximum leverage of 500 and a maximum lot size of 1,500.

The German Stock Index, also known as the DAX40, tracks the performance of the 40 largest companies traded on the Frankfurt Stock Exchange. As Germany's benchmark index, it represents Europe's largest economy and includes global leaders in automotive, technology, pharmaceuticals and manufacturing sectors.

Trading the GER40 CFD on Bybit Gold&FX offers exposure to Germany's economic powerhouse, with a maximum leverage of 500 and a maximum lot size of 500. The index is responsive to European Central Bank (ECB) decisions, German economic data and trade relationships with China and the United States.

The US Small Cap 2000, commonly known as the Russell 2000, tracks the performance of approximately 2,000 smaller publicly traded companies in the United States. Unlike the S&P 500 or DJIA, this index focuses on smaller companies with higher growth potential and increased volatility.

Trading the US2000 CFD on Bybit Gold&FX gives traders exposure to the small-cap segment, with a maximum leverage of 500 and a maximum lot size of 1,500. The index tends to be more sensitive to domestic economic conditions, making it ideal for traders looking to capitalize on US economic cycles.

The Hong Kong Stock Market Index or Hang Seng Index (HSI), represents the 50 largest companies listed on the Hong Kong Stock Exchange. This market cap–weighted index provides exposure to both Hong Kong's local economy and mainland Chinese companies.

On Bybit Gold&FX, trading the HK50 CFD offers traders access to Asian markets, with a maximum leverage of 500 and a maximum lot size of 1,500. HK50 is particularly sensitive to China's economic developments and to global trade relations, presenting opportunities for traders looking to diversify into Asian markets.

Also known as the Paris Bourse or CAC 40, this index tracks the performance of the 40 largest and most actively traded companies on the Euronext Paris. The index encompasses various sectors, including luxury goods, energy, banking and pharmaceuticals.

Trading the FRA40 CFD on Bybit Gold&FX provides exposure to one of Europe's core economies, with a maximum leverage of 500 and a maximum lot size of 500. This index is responsive to French economic indicators, ECB policies and global luxury market trends.

The Nikkei 225, or Nikkei Stock Average, is Japan's premier stock market index, composed of 225 blue chip companies listed on the Tokyo Stock Exchange. As one of Asia's oldest stock index, it’s a key barometer for Japan's economic health.

On Bybit Gold&FX, the Nikkei225 CFD is denominated in JPY, with a maximum leverage of 500 and a generous maximum lot size of 20,000. It’s particularly sensitive to Japanese economic data, Bank of Japan monetary policy and yen exchange rates, making it essential for traders interested in Asian markets.

The FTSE 100 (or UK 100) represents the 100 largest companies by market cap listed on the London Stock Exchange. This index includes multinational companies across various sectors, including banking, energy, pharmaceuticals and consumer goods.

Trading the UK100 CFD on Bybit Gold&FX provides exposure to one of Europe's most established markets, with a maximum leverage of 500 and a maximum lot size of 500. The index is responsive to Bank of England policy decisions, British economic indicators and global commodity prices.

EURO STOXX 50 tracks the performance of 50 blue chip companies from eight eurozone countries. As Europe's leading blue chip index, it provides broad exposure to the eurozone's economic health.

On Bybit Gold&FX, the EU50 CFD is denominated in EUR, with a maximum leverage of 500 and a maximum lot size of 1,500. The index exhibits high liquidity during European trading hours, and is particularly sensitive to ECB decisions and eurozone economic indicators.

The Spain Stock Market Index, also known as the IBEX 35, represents the 35 most liquid Spanish companies traded on the Madrid Stock Exchange. It provides exposure to Spain's economy through sectors like banking, telecommunications, energy and infrastructure.

Trading the ES35 CFD on Bybit Gold&FX offers access to the Spanish market, with a maximum leverage of 200 and a maximum lot size of 500. ES35 is responsive to Spanish economic indicators, ECB policies and developments in Latin American markets.

The Hang Seng Tech Index (HKTECH) tracks the 30 largest technology companies listed in Hong Kong. It focuses on firms with high business exposure to selected technology themes, including internet, fintech, cloud, e-commerce and digital activities.

On Bybit Gold&FX, the HKTECH CFD is denominated in HKD, with a maximum leverage of 30 and a maximum lot size of 500. This index provides focused exposure to China's technology sector, and tends to exhibit higher volatility than broader indices, reflecting the growth-oriented nature of its constituents.

The Bovespa Index (Ibovespa) is the benchmark index of the Brazilian stock market. It tracks the performance of the most traded stocks on the B3 (Brasil, Bolsa, Balcão) exchange. It provides exposure to Latin America's largest economy through sectors like banking, mining, oil and gas and consumer goods.

Trading the BVSPX CFD on Bybit Gold&FX offers access to the Brazilian market, with a maximum leverage of 20 and a maximum lot size of 500. The index is particularly sensitive to commodity prices, Brazilian economic indicators, political developments and US dollar strength.

The South Africa 40 tracks the performance of the 40 largest companies listed on the Johannesburg Stock Exchange. The index gives exposure to Africa's most industrialized economy, with significant representation from mining, financial and telecommunications sectors.

On Bybit Gold&FX, the SA40 CFD is denominated in the South African rand (ZAR), with a maximum leverage of 200 and a maximum lot size of 500. The index is sensitive to commodity prices, South African Reserve Bank policies and regional political developments.

The S&P/ASX 200 is Australia's benchmark equity index, representing approximately 80% of Australian equity market capitalization. This index includes companies across various sectors, with significant financial, materials and healthcare representation.

Trading the SPI200 CFD on Bybit Gold&FX provides exposure to Australia's economy, with a maximum leverage of 500 and a maximum lot size of 500. SPI200 is affected by commodity prices, Reserve Bank of Australia policies and economic developments in China, Australia's largest trading partner.

The STOXX Singapore 20 Index tracks the performance of the top 20 companies listed on the Singapore Exchange (SGX). This index provides exposure to Singapore's economy, which serves as a financial hub for Southeast Asia, through sectors like banking, real estate and telecommunications.

On Bybit Gold&FX, the SGP20 CFD is denominated in Singapore dollars (SGD), with a maximum leverage of 50 and a maximum lot size of 500. The index offers an opportunity to gain exposure to both Singapore's stable economy and broader Southeast Asian growth through companies with regional operations.

The FTSE Taiwan RIC Capped Index represents the Taiwan stock market, which is heavily weighted toward technology and semiconductor manufacturing. As home to some of the world's largest semiconductor companies, Taiwan plays a crucial role in the global technology supply chain.

Trading the TWINDEX CFD on Bybit Gold&FX provides exposure to Taiwan's export-oriented economy, with a maximum leverage of 50 and a maximum lot size of 500. This index is particularly sensitive to global semiconductor demand, US-China technology competition and cross-strait relations with mainland China.

Indices trading offers several advantages that make it worthwhile for both beginning and experienced traders. For newcomers, indices provide broad market exposure with reduced single-stock risk, allowing you to participate in market movements without extensive research on individual companies.

Experienced traders should consider indices for efficient market-wide exposure through a single instrument. On Bybit Gold&FX, high-leverage options and reliable technical patterns make indices attractive vehicles for capitalizing on broader market movements.

Furthermore, Bybit Gold&FX is currently holding 

 where you can enjoy zero trading fees when you trade select indices pairs! This allows you to maximize your profits with no extra cost.  

For those hesitant to trade indices directly, 

 provides an excellent alternative. It allows you to automatically mirror successful index traders' strategies while maintaining complete control over your investment size.

Trade indices on Bybit today and take advantage of our zero-fee event!

Trading indices on Bybit Gold&FX provides access to global markets, with flexible leverage options and competitive spreads. Whether you're looking to capitalize on movements in established economies or emerging markets, the platform's 18 diverse indices offer something for every trading strategy.

best indices to trade.png

The 18 best indices to trade on Bybit Gold&FX

Bybit Learn

Crypto

Learn what drives crypto volatility and discover strategies to manage it, from portfolio diversification to hedging, emotion-free investing, and utilizing smart order types like stop-loss.

2401-T16454_Skinny_Banner_for_Blog_and_Learn_Row_53_728x90.png

crypto_volatility_trading_1.png

crypto_volatility_trading_2.png

Skinny_Banner-1600x400.webp

crypto_volatility_trading_3.png

crypto_volatility_trading_4.png

The volatility of the crypto market is often thought to be on a scale of its own, with Bitcoin (BTC) and other cryptocurrencies frequently going through head-spinning price roller coasters. In the past few years, the world's leading cryptocurrency asset (and the primary gauge of the overall crypto market's performance), the BTC coin, has experienced wild price swings. In March 2022, having just begun to recover from the catastrophic losses of the November 2021 crash, Bitcoin entered a multi-month steep decline, losing nearly two-thirds of its value between late March 2022 and early November of the same year.

More recent times have also witnessed Bitcoin's well-known volatility. Between early October 2023 and late March 2024, the cryptocurrency appreciated by 174%, a rate of growth that sounds nearly surreal to a stock market investor. By the time of this writing (Sep 12, 2024), Bitcoin has lost around 21% of those March 2024 highs and continues to demonstrate significant volatility. 

What drives the volatility of Bitcoin and the overall crypto market — and how can investors shield themselves from it? In this article, we take a closer look at crypto volatility and the best ways to manage it.

The volatility of a financial asset is defined as the rate of variation in its price over a specific period of time. Assets with high price volatility are characterized by more pronounced and frequent price fluctuations. More volatile assets are also considered riskier from an investment perspective. However, as any market participant knows, higher risk levels also mean higher return opportunities. In fact, in financial markets, volatility is synonymous with risk.

Volatility is typically measured using the 

, which shows an asset's typical magnitudes of change within a defined period. Normally, this volatility is expressed as a percentage.

Crypto Volatility vs. Traditional Market Volatility

The crypto market's typical volatility is considerably higher than the average volatility of stock markets, and often exceeds the volatility of commodities markets as well. Even Bitcoin, which is considered far less volatile than smaller-cap 

, has much higher volatility levels than traditional financial assets. While Bitcoin's one-year volatility may be declining, as shown in the chart below, it still stood at around 40% as of April 2024. In contrast, the one-year volatility of gold, global equities (ACWI IMI) and U.S. bonds (US Agg) was around 10% in April 2024, four times lower than that of Bitcoin.

The key factors contributing to the crypto market's higher volatility in comparison to traditional markets include:

Sentiment plays an important role in any market, but is particularly influential in crypto markets, as they have lower barriers to entry compared to stock markets. For instance, on many 

 (CEXs), you can start investing with just a few dollars and no identity or residence verification requirements. As a result, many novice retail investors have joined the crypto market. These investors often lack the expertise to conduct a thorough 

 of the market. As a result, they’re often driven by sentiment, particularly social media sentiment and online news.

The relatively younger age of crypto investors compared to stock market participants also makes them more prolific social media users, and social media is the primary source where emotions, hype, opinion and other elements of sentiment around crypto assets are forged. Just ask Elon Musk, one social media influencer with a penchant for swaying sentiment around assets like Bitcoin and Dogecoin (DOGE).

The first, rudimentary crypto markets began to emerge around 2010–2011. As such, the crypto market is at most 14 years old. In comparison, trading in stocks has been around for a few centuries, while commodities markets have existed for millennia. The immaturity of the crypto market means that its defining properties and rules are still being actively developed.

Compared to traditional markets, the crypto market has low levels of regulation, although this is slowly changing. In the aftermath of the 

, regulators in the U.S. and across the globe have enacted, or are in the process of enacting, laws that would better regulate crypto trading and investment. For instance, in 2023, the U.S. Securities and Exchange Commission (SEC) 

, opening the way to bringing investment in these assets under regulatory control. The 

 in the U.S. in early 2024 has also made many analysts confident about the further stabilizing of crypto prices as more mainstream investors get exposed to Bitcoin.

However, the crypto market in general continues to be much less regulated than stock markets, which acts as one contributor to its notorious volatility.

Macroeconomic indicators like inflation rates, central bank interest rates, GDP growth rates, major free trade agreements and more have the potential to significantly affect the volatility of the cryptocurrency market. In part, this is often caused by the reallocations between asset classes initiated by large institutional investors. As a response to macroeconomic data and forecasts, these investors might shift funds between crypto and other asset classes, such as bonds, stocks or commodities. Since the crypto market has much less liquidity than traditional markets, any such reallocations can greatly affect it.

Unlike the stock market and other traditional markets, the crypto market is open 24/7 and experiences no interruption to its trading processes. The continuous nature of the market also contributes to its volatility.

Some order types and techniques can be particularly useful in 

 and digital assets. These include stop-loss orders, take-profit orders, position sizing and put options.

 orders come with an instruction to buy or sell an asset when it reaches a certain level, known as the stop price. These orders are widely used to minimize potential trading losses, and can be highly useful for limiting losses in the high-volatility environment of the crypto market.

 orders instruct traders to close a trading position when they achieve a pre-specified profit level. While stop-loss orders are used to minimize losses, take-profit orders are designed to protect profits.

 refers to the number of units a trader allocates to a specific position, taking into account their overall portfolio and 

. In high-volatility markets, position sizing can help you avoid losses resulting from overreliance on a single asset or position.

 is an options contract that gives you the right to sell a target asset at a specific price within a specified period. Put options can provide valuable protection against price losses when a high-volatility market suddenly turns bearish.

Portfolio diversification is another useful method for managing volatility. By splitting your total investment into different asset types or coins that share low or negative correlations with each other, you can protect your overall portfolio from adverse price movements. For instance, under certain market conditions, Bitcoin may exhibit low correlations with the stock market, primarily non-technology stocks. By splitting your overall portfolio between Bitcoin and non-tech stocks, you could, hopefully, expect positive returns from the latter at times when the former enters a period of losses.

 is a popular investment risk minimization approach. In its most classic form, hedging is based on opening offsetting or opposite positions to protect yourself from adverse price movements. Earlier, we noted how put options can be used to manage the volatility of the crypto market. One example of hedging would be to buy a put option on an asset on which you're currently going long. Conversely, you would buy a call option on an asset you're currently shorting as part of your hedging strategy.

Managing your emotions during trading is a critical skill, particularly in the highly volatile environment of the crypto market. The market is strongly driven by sentiment, and one way to detach yourself from emotion-based trading is to recognize the prevalent sentiment. You can do so by using crypto sentiment indices designed to measure the levels of fear (aversion to buying/predisposition to selling) and greed (aversion to selling/predisposition to buying) dominating the market. One such indicator, the 

, is offered by the Alternative.me portal.

Besides using market-wide sentiment measures, strive to base your decisions on thorough research of the crypto of interest to you in order to avoid emotion-based investing. As a minimum, this should include facts about the team behind the project, coin distribution schemes, actual activity on the platform linked to the coin, its road map and white paper, VC capital raised and historical price performance.

Useful Trading Tools for Managing Crypto Volatility

Volume analysis involves studying a crypto asset's overall trading volumes (the sum of buying and selling volume) over a period of time, such as 24 hours, 7 days, 14 days, 30 days, 3 months or longer periods. Many analysts believe that volume spikes precede price increases, while volume declines are followed by price losses.

 (MAs) can be an effective visual aid in studying the volatility of crypto assets. The 

 is derived by calculating the averages for a certain number of the latest price points (e.g., daily closing prices) for a crypto asset. These averages are then plotted along with the main price line on a chart. A typical number for the latest price points used in the calculation is often 5, 10, 20, 50 or 200, and can also vary depending upon the analyst's choice. MA-derived price lines are normally smoother than actual asset price lines, providing a useful visual tool for detecting upcoming trend reversals.

 are a visual tool for identifying trends and momentum for an asset. A Bollinger Band chart consists of three lines — a 20-day moving average price line, an upper line set at two standard deviations above the MA line and a lower line set at two standard deviations below the MA line. The number of periods for the MA line and the number of standard deviations used for the upper and lower lines can be modified, depending upon the analyst's preferences.

 (ATR) indicator is a 14-day moving average of true ranges for an asset. Each true range value is the largest difference between the asset's most recent high and most recent low. ATR is a useful measure for assessing the price volatility of an asset.

 is a valuable tool for assessing price volatility and identifying support and resistance levels. Using Fibonacci retracement, you first consider two price extremes for a given period on the price chart: the swing high and the swing low. You then calculate and plot several price points within the range, as horizontal charts. These price points typically correspond to 23.6%, 38.2%, 50%, 61.8% and 78.6% of the range. The percentages are based on Fibonacci numbers, which occur in many sequences in the natural world. When the asset price touches the horizontal Fibonacci levels on the chart, it provides an indication to traders concerning potential price reversals, consolidations and breakouts.

 (RSI) indicator is a technical analysis measure that indicates whether an asset is overbought (due for a correction) or oversold (due for a recovery). RSI represents a value between 0 and 100. Values above 70 indicate that an asset is overbought, while values below 30 signal an oversold asset.

What Is Crypto Volatility and How to Manage It

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards