CryptoCurrency

How To Minimize Crypto Trading or Investment Risks

Because of the cryptocurrency market’s reputation for volatility, many novice investors are intimidated and are persuaded to invest by the possibility of losing their money.

However, there is no denial of the fact that Bitcoin or cryptocurrency, volatility is invincibly linked to the cryptocurrency market.

For example, in November 2021, when Bitcoin hit the ATH $68,000, which was a spectacular and lucrative time for investors who already had a huge Bitcoin holding.

Soon enough in January, the cryptocurrency plunged, and Bitcoin mining fell to around $33,000 in January 2022. However, it was not all, but the Bitcoin prices started sliding down with investors fearing the market to head toward a “crypto winter.”

Well, such sudden drips and fear of FOMO to crypto winter can be shed off with expert guidance on how to minimize crypto investment risks.

Here are a few top tips to avoid being intimidated by the fear of market volatility in cryptocurrency trading or investment. 

Minimize Crypto Trading or Investment Risks

Fierce Research

Research, study, and understanding can illuminate your journey into cryptocurrency trading or investment.

It is wise not to depend on the research work of others initially, since every investor has his own set of plans to move, funds, risk management backup plan, etc. therefore, ideally you should begin by studying the growth, history, market cap, exchanges allowing the liquidation of the crypto token and such facts.

Reading the cryptocurrency’s whitepaper provided by its company is the next and one of the most crucial steps in the research process.

A whitepaper consists of the comprehensive details of a cryptocurrency right from its background to conception, which is set out by its company before its launch.

It’s like a logbook of financial, technical, and commercial information about the cryptocurrency project

Investment Buffer

There is particular financial planning which makes life easier for every individual.

Everyone has different income scales, out of which they need to meet daily necessities, and basic requirements, plan for short-term and long-term savings, retirement backup, and so on to ensure financial security in life.

Well, since cryptocurrency is entwined with a certain degree of risk of the market, its volatility being unpredictable sometimes, sometimes influenced by factors, one should only invest buffer money in cryptocurrency.

This portion should not be a part of your basic expenditure or savings plan. 

Link with Companies with Crypto Holdings

If you are still tangled with the intimidation of crypto risks, well there is a rather simple way to avoid direct risk on your investment by investing in companies that have crypto holdings.

In such cases, the companies act as a safety buffer for your cryptocurrency investment. The market risks of volatility would first be taken by the company before it reaches your dollars.

A rise in the value of both the company’s holdings of cryptocurrencies and the cryptocurrency market would increase the value of the company’s stock.

For instance, Tesla, which would be directly impacted by the increase in Bitcoin market price, has a Bitcoin holding of around US$1.99 billion as of December 31, 2021. 

Do Not Blindly Follow Trend 

There might be a lot of buzzes all around you about cryptocurrency, Bitcoin price lift, market growth, and so on. However, if you are not sure about the market of cryptocurrency, and do not have buffer funds to invest or even an understanding of the market, do not feel intimidated by the buzz.

Take out your time to study and cryptocurrency, understand how it works, your prospects, and plan small investments, instead of blindly following the crypto investment trend without understanding a string. 

Copy-Trading

As the term indicates so does it mean, to copy the trading pattern of experienced traders.

If you are not sure about scratching a workable crypto investment plan for yourself, or if are a newbie, you can duplicate the trade planning of experts on multiple crypto trading platforms.

It goes like, at first you need to pick an expert investor as per their investment, followers record, risk percentage with the trade plan, etc.

Once you pick a trader as per the varied criteria described, your account is directly linked to that trader’s account, therein you can automatically trade on the same assets and in a similar pattern as your chosen trader. 

To learn more about such pro cryptocurrency tips, go and check out the top cryptocurrency exchange platforms.

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