With cryptocurrency so extremely volatile, what should investors do to manage their risk?

The popularity of the crypto market is constantly growing. 2021 was an excellent year for Crypto. And while the events that defined the era pushed assets into euphoric territory, the start of 2022 was anything but ecstatic. cryptocurrency regulations are nightmares for investors, but the secret is that more regulation could increase market stability and the price and value of cryptocurrencies, so investors can view it with healthy optimism. With cryptocurrency so extremely volatile, what should investors do to manage their risk?

keep calm

Whether you decide to sell your cryptocurrency or see a dip as an opportunity to buy more, you must act with a cool head. Making emotional decisions, especially when trading, rarely results in anything good happening. So before you rush into the market in a panic, you’ll want to reflect on why you’re trading crypto in the first place.

Technical analysis

You can expect erratic market movements in 2022. And that is not a prediction but common sense. Doing your research regarding technical analysis can help you predict massive market moves better than others. And because it’s undervalued as a tool, technical prowess can become a game changer for the investor in you.

keep records

A crypto wallet tracker can do the work for you and help ensure the accuracy of your record keeping. This can be particularly useful for more active traders. A tracker is a third-party tool that you can sync with your wallets that will mine your data and show your profits, losses, and other factors about your activity and holdings. Some will monitor price changes, autofill tax forms, or offer negative balance warnings.

Diversify your crypto portfolio

It is not worth having too much invested in one cryptocurrency. Or as they say: don’t put all your eggs in one basket. As with stocks and shares, spread your money across different digital currencies. This means you don’t risk being overexposed should the value of one of them take a nose dive, especially as the market prices of these investments are highly volatile.

Be aware of the next regulation

Over the past year, there has been an increased focus on ccryptocurrency regulation. Although it is impossible to predict what will be installed, it is good to be aware of what legislators are discussing.

Disclaimer: The information published in the article is for educational purposes only. By using this, you agree that the information does not constitute any investment or financial advice. Do your own research and contact financial advisors before making any investment decisions.

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