Trading crypto: volatility, cycles and derivatives

8 minute read · By Krishna Avadhani, Vestora Academy · Updated 18 October 2026

Crypto trades 24/7 and is far more volatile than shares. Bitcoin has fallen more than 70% from its peak several times (2014-15, 2018, 2022). Smaller coins often fall 90% or more and many disappear entirely.

Crypto derivatives include futures (CME bitcoin and ether futures for institutions), perpetual swaps on offshore exchanges (futures with no expiry that use a funding rate to track spot), and options. Offshore exchanges often offer 50-100x leverage, which leads to rapid liquidations; most retail leveraged traders lose money. These do not pass the Vestora safety rule.

Sensible crypto risk control: size any holding so a 80% fall would not change your life, avoid leverage, use reputable platforms, and rebalance rather than chase rallies.

Key takeaways

Expect 70-90% falls as normal for crypto.
Perpetual swaps use a funding rate; high leverage leads to liquidation.
Size positions to survive an 80% drop.

Check your understanding

1. What keeps a perpetual swap's price close to spot?

An expiry date
Periodic funding payments between longs and shorts
A central bank
Dividends

Show the answer

Periodic funding payments between longs and shorts. Funding rates push the price towards spot.

2. With 50x leverage, roughly what move against you wipes out your margin?

2%
10%
50%
100%

Show the answer

2%. 1 / 50 = 2%.

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General education only, not financial advice. Examples are illustrations. Rules, tax settings and products change; check official sources.