Understanding trade risks in the bull market: Precautions tell cryptocurrency investors
The cryptocurrency world has become exponentially over the last decade, and prices are rising rapidly and rapidly increasing rapidly. As a result, many investors are passionate about cryptocurrency trade, often without fully understanding the associated risks. While some merchants can make huge rewards from their investments, others risk significant losses in the process.
What is the bull market?
The bull market is the time when the price of cryptocurrency increases over a long period of time, usually for several months or years. During this time, investors often sell their coins and make a profit just to see that prices are rising even higher. This can lead to a significant benefit to those who have invested early, but also at risk for those who come too late.
Why is the trade in the bull market risk?
Trade in the bull market is essentially risky because of the following factors:
1
Volume : Cryptocurrency markets are sadly volatile, prices rapidly and unpredictably fluctuate.
- Lack of Regulation : The cryptocurrency space is lacking in effective regulation, making investors make price movements or understanding potential risks.
3
speculative character : Trade in cryptocurrencies is often done based on speculation rather than basic galysis. This means that traders are driven by emotions, such as fear and greed, which can lead to impulsive decisions.
- Market Manipulation
: Some market participants can engage in manipulative practices, such as pumps and rebellious circuits or manipulations at a price that can affect the overall market dynamics.
Risk categories
The risks associated with cryptocurrency trade are divided into several ways:
1
Price risk : The risk that the price of cryptocurrency will significantly fall due to market fluctuations.
- Risk of time reduction : The risk that the value of cryptocurrency is reduced over time as its true value approaches (i.e., its core value).
3
Market risk : The risk that the total cryptocurrency market feels significant losses, affecting the portfolio of individual investors.
Example: Bitcoin – Perfect Risk Storm
The recent Bull Run in Bitcoin has not been impressive, and prices are rising sharply from about $ 10,000 to more than $ 60,000 within a few months. However, this price explosion is not without risks:
* Price volatility : The price of Bitcoin has fluctuated wildly since the start of the 2017 Bull Race, resulting in significant losses for investors who sold the peak.
* Liquidity risk : The ever -growing popularity of Bitcoin and other cryptocurrencies has reduced liquidity, making it more difficult to buy or sell coins when needed.
* Market Manipulation : Some market participants are involved in manipulative practices such as pumps and rebellious circuits that can affect the overall market dynamics.
Conclusion
Trade in the bull market is not without risks. While some investors can make huge rewards from their investments, others risk significant losses due to volatility, speculation and manipulation. For cryptocurrency investors, it is important to get closer to trade with caution, understanding the related risks and setting real expectations.
It is important to reduce these risks:
* Do careful research : Before investing in cryptocurrencies, do extensive research on the basics, technical analysis and market trends.
* Set the stop orders : Set the suspension orders to limit possible losses if the price of cryptocurrency drops significantly.
* Diversify portfolios
: Spread investment in several assets to reduce the risk and increase potential returns.