Ways to Mitigate Cryptocurrency Trading Risks

A rather new form of currency for the world, the digital currency has changed the next-gen look out of investment and trading. A decentralized form of currency with no government control of any country is secured and recorded through blockchain technology. Cryptocurrency does not have any physical existence like other currencies. However, you can also earn trending coins against your products or services by taking cryptocurrency as a payment. It is also commonly referred to as digital gold.You should know how to do quality trading and not depeng on quantity trading that will give you better benefits in terms of currency, coinage and long-term returns. Besides after cryptocurrency first came into existence with bitcoin in 2009 it has flourished recognizably. Here are a few bits and scraps of facts that might help to shed your doubts regarding cryptocurrency investment risks:

  • Today, almost 32% of small to mid-size businesses in the United Statesconfirm accepting payment through cryptocurrency.
  • Quite surprisingly most third-world countries are stepping ahead as the highest users of cryptocurrency like Nigeria (32%), Vietnam (21%), and the Philippines (20%). 
  • In the last decade, the number of blockchain users has multiplied surprisingly to 80 million users.
  • Bitcoin, Ethereum, Tether, Polkadot, USD Coin, Stellar, and XRP are some of the most popular cryptocurrencies ruling the digital currency market. 
  • In digital currency trading, you should also know about the right exit route, so that if there is any problem, you have a source to think about an alternative. You should know about the strong market trends and scaling of risks and probable gains. This will enable you to trade properly as part of your investment plan. 

Approach to Minimize Risk

it is indeed true that the digital currency market is volatile just like any other stock exchange, or share market, etc. understanding the market trend, risk factor analysis, etc. are essential steps before dealing with cryptocurrencies. Presently some of the top-rated currencies in demand include bitcoin, the all-time favorite, Ethereum (ETH), Tron (TRX), Litecoin (LTC), Ethereum (ETH), and Ripple’s XRP. 

As explained by Ashish Singhal, the Founder, and CEO of CoinSwitch Kuber, investments in cryptocurrencies should be planned as a long-term investment, since the market value of cryptocurrencies may differ as per supply and demand in the market. Here are a few tips suggested by the founder of CoinSwitch Kuber:

  • Make small investments.
  • Try investing 1 – 2 % of your income.
  • Make sure you have secured your savings and then invest in digital currency
  • Plan cryptocurrency trading or investments as long-term investment plans

How can you minimize the risk?

Market Research: Studying the market and various cryptocurrencies and their values is important. Not only that studying their market value over the last 5 years or so can help you to estimate your investment amount, understand the trend of value, etc. hence, you should avoid any type of hype that surrounds the Bitcoin market. You need to be careful about the performing assets and those which do not perform. 

Understand your reward/risk ratio:simply estimating your profit scopes, and returns in an expected tenure will ultimately lead you nowhere until you take into consideration the risk factors. As seen in the past, Elon Musk’s announcement of the discontinuation of cryptocurrency payments for Tesla cars, or even the bitcoin value drop in the last few months has shown major volatility in the market. 

Diversify your portfolio: Just like you do while investing in shares or mutual funds, you don’t pour all your fortune into one fund. Similarly, to overcome the risks of volatility in cryptocurrency investments, it is indeed wise to invest in multiple cryptocurrencies, so that even if the value of one drops, you can combat with others. 

Consult experts: if you are a newbie to cryptocurrency and it all seems puzzling to you. There is nothing like getting consultation from experts. You can even get guidelines through expert crypto exchange platforms like Bitcoin Era. Besides instead of jumping into investments right away, take your time to understand and know more about the market. While bitcoins have a high value, which could be out of your affordability, other currencies could be within your limit of investment. 

Therefore, even though risks are there in all types of investments, you can take intelligent steps like market research, small investments, long-term plans, etc. to overcome risk challenges. 

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Dan Dunn
Executive Managing editor

Editor and Admin at MarkMeets since Nov 2012. Columnist, reviewer and entertainment writer and oversees all of the section's news, features and interviews. During his career, he has written for numerous magazines.

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