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Posted on January 25, 2019 at 6:00 PM
Cryptocurrency Market Volatility Protection Tools

Cryptocurrency Market Volatility Protection Tools Beta.

One of the biggest concerns for online stores when accepting Cryptocurrencies such as Bitcoin or Altcoins as payment for their goods or services, is without a doubt market volatility.

A store quite simply does not want to be stuck holding somebody else’s bags/coins in the event of a market flash crash, or in an instance where there just isn’t enough buyer interest on a certain coin that day for the store to cash out to fiat currencies such as US Dollars, Euros, British Pounds, etc. Potentially leaving them stuck with a cryptocurrency they have to sell at a significant loss, or even worse can’t sell at all.

This can be especially concerning for an Altcoin that is doing extremely well one week only to then do very poorly the next.

The CryptocurrencyCheckout Solution:

To help protect against Excessive Market Volatility we have introduced our Market Volatility Protection Tools Beta to our CryptocurrencyCheckout Platform.

How does it Work?

This feature works by constantly monitoring all of the Largest Cryptocurrency Exchanges, watching for things like:

  • Current Market Prices
  • Large Price Fluctuations
  • Order Book Thickness
  • Daily Volume Transacted

What Exchanges do you monitor?

We monitor and average out prices, volume and volatility across many exchanges. Some of the most notable exchanges we gather data from:

  • Gdax
  • Kraken
  • Bitfinex
  • Binance
  • Bitmex
  • Bitflyer
  • Bitstamp
  • Others (For Smaller Coins.)

And then using the information gathered to allow a store to easily adjust their risk on individual Cryptocurrencies with Volatility Controls Like:

  • Set Maximum allowed Price Fluctuations on coins you’re willing to accept
  • Charging a Markup to accept a specific Cryptocurrency
  • Requiring a minimum daily traded volume across exchanges
  • Combination of all of the above

Set Maximum allowed Price Fluctuations on coins you’re willing to accept.

By Enabling the Maximum Daily Price Percentage Drop you are willing to accept, our platform will automatically disable an accepted payment method/Cryptocurrency if the price decreases to below your set threshold on any given day.

As an example, if say you were to accept Dash as a Payment Method for your products or services, and you set a Maximum Daily Price drop you’re willing to accept to 5% if Dash has a flash crash and quickly goes down 7% our platform will automatically Disable the ability for your customers to pay in Dash, and ask them to use another payment method that is more stable in price at the moment, or wait until the price of Dash stabilizes before they make payment.

This feature is especially useful in ensuring that customers don’t try to quickly dump their coins on you in order to get out of them as quickly as possible.

Offering a Pricing Discount or Charging a Markup to accept individual Cryptocurrencies.

Say you want to broaden your customer base by accepting more Cryptocurrencies and Altcoins, but a certain coin seems more volatile than you are comfortable with, to help reduce the risk associated with accepting these risky altcoins you can choose to charge your customers a markup to accept this specific cryptocurrency.

For instance if you are accepting Bitcoin but also want to start accepting Dash, but Dash seems a bit more volatile than Bitcoin, you can choose to charge your customers an extra 2% to accept Dash as a payment method.

Vice Versa you can also offer an additional discount to accept one of your favorite Cryptocurrencies as payment, offering an additional discount on your customers order would likely convince them to use this Cryptocurrency instead.

You’ll definitely want to do this within reason as our platform is very clear with your customers how much of a markup or discount you will offer to accept each individual Cryptocurrency, and charging a large markup on one cryptocurrency could anger a customer and keep them from continuing with their order.

Require a Minimum Daily Volume on the Top Exchanges.

This works by allowing you to set a threshold stating that the top exchanges must transact a specific amount of daily volume otherwise you do not want to accept that cryptocurrency as payment for your products or services.

Daily Volume is a very good indicator to ensure that there is enough buying interest on a specific cryptocurrency to allow you to safely cash out of any cryptocurrencies that you receive as payment.

A good example for this would be if you accept $100 worth of Dash for a product you sold, if there is over $500,000.00 worth of Dash bought/sold on the Cryptocurrency Exchanges that day it’s pretty safe to assume there is enough buying interest for you to easily sell/trade your $100 worth of Dash without issue.

But say you accept $100 worth of another Altcoin for your product, but the daily traded volume on that Altcoin is only a couple thousand dollars, this would indicate that buying interest is very low on that coin that day, possibly making it very difficult or time consuming for you to easily sell/trade your coins on the exchanges at a profit.

By simply setting a Required Daily Volume Threshold our platform would automatically disable any payment methods/Cryptocurrencies that do not reach your Required Volume Threshold on days that volume is low, but enable them on days that volume has increased.

Combination of all of the above features.

By combining Price Fluctuation Controls, with Market Volume Requirements, and by adding an Additional Markup to accept a Coin you can see how enabling our new Market Volatility Protection Tools can help you to easily reduce your risk of accepting any given Cryptocurrency.

Settings and how our Volatility Protection Feature would respond to large spikes in Volatility:
  • Additional Markup: 2%
  • Required Volume: $500,000.00
  • Max Price Drop: 2%
The Price of a Cryptocurrency I’m accepting Crashes due to FUD/Bad News:

If our system notices a large spike in volume followed by a drop in price exceeding your 2% threshold on the daily, our platform will automatically disable the payment option of that Cryptocurrency, preventing your buyer from using that Coin for payment until it becomes more stable in price.

A Cryptocurrency I’ve been accepting for months has very little volume/no buyers lately:

If the Required Volume option is enabled, our platform will automatically disable the Payment Option for your buyers on that Cryptocurrency until the Buy/Sell Volume increases on Exchanges to above your set Threshold again, making sure that you are not accepting Cryptocurrencies that are not currently in demand.

All of the Crypto Market dropped significantly in price today, and I do not want to accept any crypto until it is more stable:

If you enable the Max Price Drop Allowed feature on all of your accepted Cryptocurrencies, and the entire market goes down in price to below your maximum allowable Percentage Drop Threshold, our platform will automatically disable all Cryptocurrency Payment Methods, and ask your buyers to use another payment method, or to try again when the market is more stable.

How to Enable Volatility Protection Tools:

You can enable the Protection Tools on the Connection Setup inside your Cryptocurrency Checkout Dashboard.

  • Choose to Charge a Markup or Offer a Discount.
  • Select Discount or Markup Percentage.
  • Enable Required Daily Exchange Volume.
  • Max Allowable Percentage Drop.

To learn how to start accepting Cryptocurrencies on your Website or Store, view our Cryptocheckout Installation Guides Section

If you have any issues feel free to send us a message, or join us on discord.

Disclaimer and Risks Involved with Accepting Cryptocurrencies:

Tips to help you reduce risk when accepting Cryptocurrencies:
  • Research and Learn to use Cryptocurrency Exchanges so you can cash out quickly/easily.
  • Sell Received Cryptocurrencies or Hedge your Positions Quickly to Reduce Risk when paid in crypto.
  • Watch the Crypto Markets, and get some basic understanding of trading and the fees involved.
  • Stay up to date on all the latest news related to any Cryptocurrencies you accept.

With the right knowledge and know how there is a lot of money to be made in the Cryptocurrency Markets, these are in demand assets with low competition in the resell world, when done right accepting Crypto on your website can greatly increase your customer base and bottom line, but one should always do their Due diligence and create and execute a solid plan to reduce risk as much as possible when accepting/holding/buying/selling Cryptocurrencies.

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