5 Things all Investors Get Wrong About Crypto Volatility

How many times have you heard that there is no better way to earn money than by investing it in something new or participating in the stock or real estate market? Let’s first state the obvious and say that making money this way is perhaps the best way to enhance profits, and now, when we settled that, we can focus on one new aspect in which we can invest.

For a little more than a decade now, cryptocurrencies are changing the financial sector as we know it, as facts like that it is decentralized money changed the entire financial game.

Do your research before investing

As for investing in cryptos, those who believed in the concept and technology around it and invested in it once it first hit the market are now billionaires and recent events when the value of BTC skyrocketed only further encouraged people to place some money in digital assets. Hopefully, now, everyone realized that digital money is something that will stay with us for quite some time, but even though the papers and news are filled with information and a detailed explanation about cryptocurrencies, before you embark on this crypto journey, there is plenty of research that you need to do.

Learning the terminology is a good start but will lead nowhere if that knowledge is not supported by facts about what makes the value of crypto go up and down or what’s halving, for example. Above all that, one characteristic of cryptocurrencies that was also the main reason why people hesitated to invest in them is the volatility. What didn’t help are those who read a thing or two about it and started placing huge amounts of money without checking all the facts and not following the recent market events, which, for them, ended in losing money.

That is why, if you don’t want to share that experience with them, you should make sure you really but really know and understand cryptocurrency volatility in its essence. Of course, we will help you with that, as we will present you with FIVE things all investors get wrong about crypto volatility.

1. It is not necessarily a bad thing


Volatility doesn’t have to be bad, just like the word risk, which we usually link to something bad. Taking risks and volatility is something that you will experience with any type of investment, as if there weren’t for risks, there wouldn’t be profits, and a similar thing can be said about volatility. Now, what troubles many is the misinformation that if something has high volatility, that surely means it is unstable, and the profits are unlikely, which is a wrong belief.

Namely, diversification is what one should always have in mind in order to avoid any unexpected and sudden losses. What this means is that one should invest in several tokens as a part of a wider investment portfolio of assets. That will make any change due to some tweet or announcement much unlikely, as there will always be cryptocurrencies which value will go up.

2. Forget to check the address

Many people think that it is impossible to make such a trivial mistake, but the truth is much different. Bank transactions can easily be stored or canceled if we make a mistake and transfer money to the wrong account, but crypto transactions are irreversible. Because of that, it is necessary to check the receiver address at least twice to make sure that you are sending funds to the right account. Once the transaction is done, there is often no way to get the funds back if you make a mistake.

3. Entering the crypto world unprepared


It is not easy to know what volatility is and how tricky it can be, so many traders are getting into the crypto world unprepared. Cryptocurrencies are highly volatile, which means that their price can change in a few minutes, and that can make a big problem for traders.

Many new traders think that they can handle volatility, but once the rollercoaster starts the ride, it is difficult to bear with it without the necessary knowledge. That means that you need to be well prepared to handle too much stress when the price rapidly changes, and no one expected that.

4. Buying the wrong cryptocurrency

The Crypto market is increasing all the time, and because of that, we can find many new currencies on it. One of the biggest mistakes that traders can make is to choose the wrong one to buy at that moment. Because of the high volatility, it is difficult to decide which one is the best for trading at the moment, and it is necessary to be informed all the time. All of them have their ups and downs, and it is crucial to be lucky enough, guess which one will raise the price and decide to trade that one.

5. Forgetting the password


Although this mistake is not directly connected to volatility, it is necessary to mention it because it is one of the mistakes that happen most often. We are all living busy lives, and it is not a big surprise that we forget things all the time, but forgetting the cryptocurrency wallet password can be a huge problem.

In that situation, we are losing access to our wallet and all the funds in it, and we cannot make any transaction. It is possible to get the new password, but it requires a lot of time and nerves, and because of that, writing it down on some paper that we will keep between the important documents is probably the best idea.

The bottom line

When it comes to investing our money, we need to be careful because we can easily lose it all in a few minutes. Because of that, it is necessary to check everything twice and keep updated with the crypto world. That is the only way to understand volatility and try to avoid losing funds because of rapid crypto value change. Luckily, even these kinds of troubles can be a thing of the past, as there are plenty of platforms and software with proven results like that can help us with crypto trading.