Crypto volatility should be handled the same as any market turbulence
Ahead of the forecast upcoming slump in the value of Bitcoin, cryptocurrency volatility should be considered the same as any financial market turbulence, which many investors will successfully make the most of.
This prediction came as a result of Mt Gox – a defunct exchange – transferring 16,000 tokens.
Indeed, this is the first time in three months that Mt Gox has moved any of its assets. The last time the obsolete exchange sold-off funds there was an ensuing price shock, as the supply of the currency soared in the market.
Of course, this is creating a great deal of noise and reaction from numerous cryptocurrency enthusiasts and investors.
That said, it’s crucial that cryptocurrency volatility is treated in the same way as any turbulence in financial markets.
As with any type of investing, the investor’s best tool in order to sidestep potential risks and take advantage of opportunities that arise in times of market volatility, is diversification.
Cryptocurrency investors should ensure they are diversified across the principal digital tokens, for example Ethereum and Ripple, and as a part of a wider investment portfolio of assets, sectors and regions.
Some of the shrewdest investors have constantly utilised market volatility as major buying opportunities in traditional financial markets. Topping up their portfolios when prices are lower and/or making the most of lower entry points puts investors in a considerably stronger position.
And the cryptocurrency market is no different.
Indeed, one tool to avoid losses in the crypto market that broadly goes unnoticed and is therefore widely underused, is the stop-loss mechanism. This is an order that limits potential losses when trading in the crypto market.
Stop-loss is available on deVere Crypto, and the easiest way to look at it is like an insurance policy.
Naturally, there can be intrinsic negatives in regard to volatility, but it is ill-advised to believe that all volatility is completely negative.
Indeed, volatility in the crypto market, as with all financial markets, can be used by investors for long-term financial gain. Using volatility effectively and efficiently can be an extremely powerful investment strategy.