Strategize well before you invest in Crypto when the market is volatile!

In the present market crores of people own cryptocurrencies and are quite aware of the fact that the crypto market is volatile. Crypto market volatility is in existence since the introduction of digital assets in the finance ecosystem. Popular cryptocurrencies like Bitcoin and Ethereum have seen massive spikes and drop in value which is the reason why it is important to keep a check on the volatility factors before you invest.

Why is the crypto market so volatile?

The cryptocurrency market has been volatile since the introduction of digital money. Cryptocurrency is one such finance system that has the term “roller coaster ride” embodied since its invention. There can be incredible highs and incredible lows with cryptocurrencies in a time span of only a decade. Best depicted by the Crypto experts in Kolkata, there can be certain factors that drive crypto volatility –

·  Emanating market:

The crypto market is still in its infancy and an emerging market that is gaining popularity but can be the reason for discontent for investors. However, when compared to the traditional market, the crypto space is minuscule which means if people are holding a large amount of crypto at any point in time, then the market can influence your investments.

·  Financial risk:

This is yet another reason for volatility as the crypto market thrives on risks or speculations. To make profits investors would need to spike up or go down to generate profit and these bets cause a sudden outgo of digital money leading to volatility.

·  Entirely digital:

Most of the cryptocurrencies are digital assets without being backed by fiat money or a commodity, this makes the prices of the assets rise and fall as per demand and supply parameters. The price of cryptocurrencies is entirely determined by the people purchasing them at any given time and this is the reason for rising in volatility.

Investing in risky assets like cryptocurrencies can be like a hot air balloon ride, where once you enjoy the view from the top with the thought to get off immediately after realizing you are suspended by hot air.

Volatile market – Here is how to invest your crypto!

Cryptocurrencies being the new investment instruments with very little data for analysis, the basic rules for investing should be remembered before investing in a volatile condition –

· Small investments:

Many cryptocurrencies are surging ahead in the market with rising percentages, but don’t get lured by such output. As with the investment amount, one should only invest the one to be lost and only put 10-15% of your crypto portfolio at stake.

·  Day trading:

Crypto investment is a high-risk reward game where, as an investor, you have to digest high volatility. However, with the day trading strategy, you can trade crypto in a volatile market as the trading strategy involves holding trade positions and exiting the positions on the same day itself. It would be best to follow the technical indicators before entering and exiting trade points.

·   High-frequency trading:

Based on algorithmic trading high-frequency trading or HFT is generally used by market experts. Simply program algorithms and trade bots to enter and exit your crypto and the bots will initiate the complex trade strategies almost instantly.

·   Diversified portfolio:

If you are investing your crypto in a volatile market then it would be suggested to diversify your investment portfolio with multiple digital assets. This will help balance your portfolio when the market is running low. Make use of derivative products and confine the portfolio.

Summing up, best advised by the crypto experts of a Cryptocurrency exchange development company, as a crypto investor you should be aware of the potential market risks that can come to the fore suddenly when the market is volatile. So, if you have decided to invest your crypto in a volatile market then it is important to be aware of the sudden market fluctuations affecting your investments.