Cryptocurrency Volatility Risks – 3 Ways to Avoid Them

Background

Despite what many market analysts and experts, mainly the skeptical ones might believe, we do believe that virtual currencies are an evolving phenomenon in this world, and the only path we see it going towards is in the forward’s direction. We think that crypto has tremendous potential and upside for its investors as it is an emerging investment option with incredible potential. How much to utilize this option in order to make the gains, however, lies in your own hands.

We do acknowledge the concern of a lot of price fluctuations and volatility in the crypto market. Bitcoin, especially, experiences a great deal of volatility in the market on a daily basis. Due to this, the use of BTC to make daily payments becomes very difficult, certain to impossible for many traders and users. This is the reason why a wide range of investors remain skeptical and uncertain about investing and trading in crypto.

However, on the bright side, we believe that there are some ways this problem of volatility can be mitigated, and that, we believe, can be done by identifying, analyzing, adapting, and utilizing newer strategies. We have identified 3 of the most major of these strategies for you in order to avoid and reduce the risk associated with volatility in the crypto market, as much as you can:

1.     One option is to go for Cryptocurrency Auto Trading Bots

A relatively newer form of technology in this market is the automated trading bots. This technology is relatively newer in the market, and a lot of people are doubtful about it as well. However, we believe that this technology, which uses Artificial Intelligence and preset coded algorithms in order to take actions and generate profits for its users, is a revolutionary innovation by the tech industry. This will allow the traders to trade more efficiently while utilizing their time freed by this automation elsewhere to make the most of it. Bitcoin Future is an option for traders who want to use this technology. It is an automated trading bot for bitcoin crypto, which uses advanced Artificial Intelligence and algorithms to generate profits for its users.

2. Another Option is Stop orders – May Provide a degree of Protection

Another simpler method of protection against volatility is by using stop orders. This option is provided by several major exchanges to its customers. What a stop order does is that it notifies the exchange to provide a pre-settled quantity of a virtual currency for both buying and selling, given its price falls at a specific price point.

There are mainly two types of these stop orders; Stop-loss orders and Buy-stop orders.

3. Conversion of fluctuating virtual currency to fiat

Another well-known method of protection against the ongoing volatility of crypto is by converting it into a local fiat currency, regardless of what the prevailing market rates are for it. If done, this relaxes the investor as they would not have to track the trend and trajectory of the digital asset investment, had they still had it. The money you would have gotten would safely rest inside your exchange wallet. This money can, later on, be used to purchase more cryptocurrency.

It can be seen that this is a very efficient way of mitigating volatility risks and preventing great amounts of losses. However, entering and leaving the crypto too often might not be the best idea either. This is because there is a fee charged associated with the processing of conversion of the currency both to and fro from one form of currency to the other. Other than that, this whole method can be really time-consuming and difficult, depending upon the location of the person and the availability of services and resources, such as the crypto exchange.

Another way to go about this method is to convert your crypto into another one, whose value stays fixed such as the NuBits.

Given this will be a crypto-to-crypto conversion, there will no longer be the drawbacks associated with moving to different currency forms, while this will also retain the safety offered by the stability of the fiat currency.

However, people should be aware though. A handy can it prove to be, these crypto coins, whose values are fixed, are not completely unaffected by the counterparty risks. Also, market experts believe that their existence and systematic formation may not be legit and rather questionable, hence causing them to collapse at any time in the future.

Conclusion

The article above shows the different ways the volatility risks associated with virtual currencies can be averted. You are also advised to research this matter on your own as well, in order to protect your investments as much as you can, and gain from one of the most lucrative investment options currently existing in the global market – cryptocurrency.

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