Cryptocurrency investment can offer massive returns, but with any investment, there are risks involved. Crypto is a pretty volatile market, but there are ways to protect investments to some extent.
Some cryptocurrencies have enjoyed massive success in the 15 years since Bitcoin launched the industry, and more businesses and brands than ever before now accept digital currencies. One of the first industries to embrace crypto was the gambling industry, and there are some great choices for consumers who want secure access to online casinos.
Stake Casino has forged a reputation as a market leader since it was launched in 2017. However, new platforms have emerged in the meantime, so online finance expert Milan Novakovic recommends looking at Stake casino alternatives for the best value for money. Some of them are innovative in the sense that they facilitate instant payouts, others give above-average registration bonuses, and some platforms provide special offers for mobile players.
While many investments can be seen as a gamble, there are ways to mitigate the risk, much like placing a wager in a casino. Weighing up the pros and cons and taking the steps below should help you protect investments from market volatility, and help you enjoy a healthy return.
Portfolio Diversification
Portfolio diversification is essential to risk management in investments. Putting all of your eggs in one basket could be disastrous if things go wrong and you could find yourself losing all of your savings.
Investing in a variety of cryptocurrencies can help you to avoid massive losses should the market plummet. You will also be able to invest in long or short-term opportunities, and won’t have to worry if one underperforms.
Stablecoin Investment
Stablecoins are cryptocurrencies that are pegged to the value of other assets, most typically a fiat currency.
This helps them maintain relative stability, hence the name.
Stablecoins are more likely to be used for everyday transactions and offer users all the benefits of blockchain technology, without the added risk. Fast, secure transactions with lower fees are just some of the benefits users will enjoy.
Dollar-Cost Averaging
Dollar-cost averaging (DCA) is an investment technique that sees investments of fixed amounts on a regular basis, regardless of the asset’s price. This helps mitigate the risk of volatility.
This means that your initial investment price won’t be as relevant to your overall return, as you will buy at different values.
Implement Stop Loss Orders
Stop-loss orders are predefined instructions that instruct assets to be sold if the price drops to a certain amount. You will be able to choose whether you want all of your cryptocurrency, or just a portion to be sold as a way of minimizing losses.
It is important to remember that market volatility in the past has seen cryptocurrencies like Bitcoin drop in value before regaining and surpassing previous top values.
Use Hedging Strategies
Hedging strategies are a risk management strategy that allows investors to reduce the potential losses of declining investments. They work in a similar way to insurance policies in the event of unforeseen circumstances.
Using derivatives such as futures or options can protect against price declines.
Don’t Be Afraid To Readjust Your Portfolio
Don’t just sit back and expect your investments to do all the hard work for you. Regular assessments will help you identify the crypto that is working well for you and those that aren’t.
Doing this will also give you a better idea of how markets change and can be affected by external factors. This will stand you in good stead for future investments.
Look At Long-Term Investment Opportunities
If you are hoping to make millions overnight, it is pretty unlikely. Short-term investments with the potential for high returns are also the highest risk, which is why taking the slow and steady approach could net you a nice retirement package further down the road.
Long-term investment opportunities typically have less risk and are seen as more stable by investors and experts. Of course, there is still a risk, but it is significantly smaller on an investment that nets smaller returns.
Avoid Borrowing To Invest
Exciting investment opportunities can sometimes entice you to put everything you have and more into them. This is a very risky strategy and we have already discussed the pitfalls of putting all of your eggs in one basket.
Borrowing to invest increases the risk and your potential losses if something goes wrong and should be avoided.
Stay Up To Date With Market News
You should be fully informed before making any investment, and staying up to date with all crypto news and developments will make it easier for you to identify potential opportunities or situations that need your immediate attention.
There are lots of dedicated sources that offer impartial information and updates that will help you keep abreast of all the news that could impact cryptocurrency market values.
Explore Yield Farm and Staking Options
Staking and yield farming is a way to earn passive income through cryptocurrency rewards. Staking requires users to lock crypto into the blockchain network as a way to support its operations. The staker validates new transactions and adds the new blocks that are created to the blockchain. This results in staking rewards being awarded to the user.
Yield farming is a form of lending to decentralized exchanges in order to provide liquidity for the platform to trade. Those involved are typically rewarded with native project tokens, as well as potentially earning a percentage of transaction fees.
Make The Most Of Data Analysis Tools And Volatility Indexes
Keeping up to date with current crypto news is essential, but using data analysis tools and historical data will give you a better understanding of how markets have been affected and what could happen in the future.
Conclusion
Despite the crypto market being regarded as a volatile market, its increasing adoption rate among consumers and businesses gives it far greater potential. As it becomes more widely established as an alternative to fiat currencies that simplify international transactions, values could increase.
Judging which cryptocurrencies have the best chance of success will be a difficult task, and established crypto with high values offer less prospect of high returns.
Understanding the market, reading the white papers of new investment opportunities, and gauging early support will all go a long way toward helping you make a good first investment. Continued portfolio management will then give you more chance of long-term success.
