Is VeChain Crypto Coin high risk? (Crypto:VET) - Macroaxis (2024)

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Since volatility provides cryptocurrency investors with entry points to take advantage of coin prices, investors in projects such as VeChain can benefit from it. Downward market volatility can be a perfect environment for traders who play the long game. Here, they may buy additional VeChain shares at lower prices. For example, an investor can purchase VeChain coin that has halved in price over a short period. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Similarly, when the prices of VeChain's crypto rise, investors can sell out and invest the proceeds in other coins with better opportunities. Investing in volatile markets will allow investors in evolving Defi or crypto projects such as VeChain to generate better long-term returns.

Moving together with VeChain Crypto Coin

VeChain Market Sensitivity And Downside Risk

VeChain's beta coefficient measures the volatility of VeChain crypto coin compared to the systematic risk of the entire market represented by your selected benchmark. In mathematical terms, beta represents the slope of the line through a regression of data points where each of these points represents VeChain crypto coin's returns against your selected market. In other words, VeChain's beta of 0.78 provides an investor with an approximation of how much risk VeChain crypto coin can potentially add to one of your existing portfolios. VeChain exhibits above-average semi-deviation for your current time horizon. We encourage cryptocurrency investors to investigate VeChain individually to make sure intended market timing strategies and available technical indicators are consistent with their estimates about VeChain projected systematic risk. VeChain appears to be a penny crypto. Although VeChain may be, in fact, a solid short-term or long term investment, many penny crypto coins are speculative digital assets that are often subject to artificial coin promotions and campaigns of hype which may lead to misinformation and misrepresentation. Please make sure you fully understand upside potential and downside risks of investing in VeChain crypto or similar risky assets. We encourage cryptocurrency investors to look for signals such as email spams, message board hypes, claims of breakthroughs, volume upswing without any event/news,and sudden news releases. We also encourage crypto traders to check the biographies and work history of the founders of the accociated project, carefully read the white papers and consensus ducoments before investing in high-volatility coins. You can indeed make money on VeChain if you perfectly time your entry and exit. However, remember that cryptos that have been the subject of artificial hype usually cannot maintain its increased price for more than a few days. The price of a promoted high-volatility instrument will almost always revert. The only way to increase coin holder value is through legitimate performance analysis backed up by solid fundamentals of the project the coin represents. Understanding different market volatility trends often help investors time the market. Properly using volatility indicators enable traders to measure VeChain's crypto coin risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact VeChain's price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different cryptos as prices fall or investing in DeFi projects.

3 Months Beta |Analyze VeChain Demand Trend

Check current 90 days VeChain correlation with market (NYSE Composite)

VeChain standard deviation measures the daily dispersion of prices over your selected time horizon relative to its mean. A typical volatile entity has a high standard deviation, while the deviation of a stable instrument is usually low. As a downside, the standard deviation calculates all uncertainty as risk, even when it is in your favor, such as above-average returns.

It is essential to understand the difference between upside risk (as represented by VeChain's standard deviation) and the downside risk, which can be measured by semi-deviation or downside deviation of VeChain's daily returns or price. Since the actual investment returns on holding a position in vechain crypto coin tend to have a non-normal distribution, there will be different probabilities for losses than for gains. The likelihood of losses is reflected in the downside risk of an investment in VeChain.

VeChain Crypto Coin Volatility Analysis

VeChain Projected Return Density Against Market

Assuming the 90 days trading horizon VeChain has a beta of 0.7771 . This entails as returns on the market go up, VeChain average returns are expected to increase less than the benchmark. However, during the bear market, the loss on holding VeChain will be expected to be much smaller as well.

Most traded cryptocurrencies are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or coin-specific or project-specific) risk. Unsystematic risk is the risk that events specific to VeChain project will adversely affect the coin's price. This type of risk can be diversified away by owning several different digital assets on different exchanges whose coin prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that VeChain's price will be affected by overall cryptocurrency market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a VeChain crypto's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.

VeChain has an alpha of 0.5529, implying that it can generate a 0.55 percent excess return over NYSE Composite after adjusting for the inherited market risk (beta).

VeChain's volatility of a cryptocurrency is measured either by using standard deviation or beta. Standard deviation will reflect the average amount of how vechain crypto coin's price will differ from the historical average after some time. There is a big difference when you buy VeChain from a government-approved cryptocurrency exchange like Coinbase or a marketplace managed by a foreign entity. Using a local, USA-based marketplace will be less exposed to price manipulation. However, just like with stock markets, cryptocurrencies fluctuate because it is influenced by constant media hype, basic supply and demand laws, investor sentiments, and government regulations. These factors work together to add to VeChain's price volatility.

VeChain Crypto Coin Risk Measures

Assuming the 90 days trading horizon the coefficient of variation of VeChain is 872.43. The daily returns are distributed with a variance of 35.81 and standard deviation of 5.98. The mean deviation of VeChain is currently at 4.05. For similar time horizon, the selected benchmark (NYSE Composite) has volatility of 0.

VeChain Crypto Coin Return Volatility

VeChain historical daily return volatility represents how much of VeChain crypto's daily returns swing around its mean - it is a statistical measure of its dispersion of returns. Keep in mind that cryptocurrencies such as VeChain have only been around for a short time and are still in the price discovery phase. This means that prices will continue to change as investors and governments work through the initial concerns until prices stabilize, provided a stable point can be reached. VeChain assumes 5.984% volatility of returns over the 90 days investment horizon. By contrast, NYSE Composite accepts 0.6215% volatility on return distribution over the 90 days horizon.

Check out World Market Map to better understand how to build diversified portfolios, which includes a position in VeChain. Also, note that the market value of any cryptocurrency could be tightly coupled with the direction of predictive economic indicators such as signals in board of governors.

You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.