Bitcoin Forum

Hello Everybody !

I am a French Student in a Business School, and  currently working on BitCoin

On a last topic, I asked if it is possible to monitor or at least reduce the price volatility of BTC, but it seems not to be  the case (or in a very hard way so)

Now I have another question: are there ways to reduce / or at least to limit the risks for a company when a sudden fall in price happens ?
Like a financial package, or baskets of stocks ...

Thanks for your answer !

Quentin

I think if the company is full inside bitcoins you need to trust it or don't use. If you want less risk don't use only bitcoins, just a % of your company in bitcoins and the rest in fiat. But me and I believe most persons here don't believe bitcoin will have a big fall on its price, at least for now.
It's upon to you, trust bitcoin or not?

The exposure to volatility comes from holding Bitcoin as an investment or as trading capital. The exposure to trading margins is more significant when using Bitcoin as a payment option, but of course margins are wider when the price is volatile. There are a number of Bitcoin futures and derivatives trading sites if you want to hedge the price or speculate.

Dealing with Bitcoin has certain risks, especialy for companies, but on the other hand every investment has its own risk that is inevitable. Volatility comes with Bitcoin price and there is no way to fuly protect yourself from risks you can only find some kind of balance but you can't influence the volatility.

I think risk for the company stay till bitcoin will not be used and accepted everywhere, cause of if the firm will work with bitcoin today it stays million places who work with fiat and the pricechanging will affect on you a lot, your business even can die if the price for bitcoin will fall. But in the case if bitcoin will be used such risk will be minimal.

Mitigating against risk in the case of bitcoin will be very difficult if you still keep it in that currency. It is true that the currency comes with enormous risk and that is why some people might conclude that its a ponzi scheme until when we have a commercial hub that tries as much to regulate price I guess the only way to mitigate against risk is be ready to withdraw and convert to Fiat as soon as possible and other means is if you happen to get an asset with bitcoin then go for it because if you dont by the minute the value of bitcoin you have might not be able to get that same commodity in the case of fall in price.

How about when price skyrockets from low $400 and goes to high $1000? the profit is good then but when comes to fall and decreasing value you want to talk about precautions? you can't have both sorry. don't be fooled by day traders trying to make you panic sell, bitcoin wont lose it's value.

his question does not relates to bitcoin he just introduced himself with antecedent of a question on this forum on bitcoin.

It is the same with companies that operate with fiat currencies. When there was a decline in dollars value how you reduce risk.
If your company or your customer payments is not bitcoin related then it is best to watch bitcoin only as a potential long term investment

I don't think there is a way to reduce the risk let alone the loss itself if it happens.It is what it is,if the BTC price falls the company has to face that and try to get over it,on the other hand if BTC's price goes up happy days are coming so it's like for everybody else here.

I think all business is definitely a risk, respectively, things that need to be prevented is that you are always looking for information before making a decision and if I think if you hold bitcoin in the long run I believe it will benefit you

Just like when there a fluctuations in value in the dollar/euro or euro/yen or whatever currency pairs, you can hedge against it. It is more difficult with bitcoin right now, of course, but if/when the bitcoin etf is trading, it will be easier.

Alternatively, you could use a payment processor which immediately converts to fiat. 

It really just is a question of the amount of risk you want to hedge and the amount you are willing to pay to do so.

you can't do much about bitcoin price volatility except wait for more adoption and the market to grow much bigger so that the volatility decreases as it has been compared to a couple of years ago.

but as a business what they usually do is that they convert to fiat right on the spot. for example when you buy something from Steam through bitpay, that service converts the fiat to bitcoin then asks the user to deposit that amount. after user deposited that amount they "most probably" change it to fiat and credit Steam.

You know, bitcoin is controled by big whales. They control the price. We can reduce the risk if they will just stick to bitcoin. No dumping, just adoption. But that seems impossible to happen. Im used to bitcoin's volatility and so as the others. We are risk takers. Maybe its not the right field for you mate. If you want less risk. You should go for gold.

No i haven't seen/heard about such packages but like in forex trading you can also set stop loss option so that your sell order can get executed when price tries to go down below any price range.

However we have to trust those trading platform with our full amount of bitcoin which is pretty much risky, looking at history of few exchanger who got hacked before.

Well most smaller companies and merchants work through payment processors and these payment processors eliminate almost all risk for these companies, because all bitcoins received as a payment are directly converted to fiat. So in this way the price drop does not influence these companies.

These companies can also stipulate that only a percentage of the coins must be converted back to fiat, to give them the option to profit from price increases. ^smile^

if you only want to monitor for the price, you can stay with your computer and take a look in the market and i am sure you can see the volatile. but to predicting about when the price is falls or increase, i think you need more than to look in the market because it is related with the trend in the market. i think there are no other ways to limit the risk when we know the price is getting down and the only ways we can do is selling our bitcoin before its down too much but we can get loss in fiat value.

Just because of the increased volatility, business people hesitate to accept bitcoin into their business. Now the volatility have decreased much compared to the past days. Making half the investment in terms of bitcoin and the remaining in the form of fiat is the best way to reduce the risk of using bitcoin into company purpose.

True that,it's actually better if you diversify your investments,I hope that the violatility settles,well I know that it can't go away fully,but as long as it's on the positive side,it's all great :D I think that companies can afford whether BTC goes down,just if not too much

If you have an investment, a huge investment then you are troubled by the volatility of bitcoins then the most or the best thing to do is to diversify. I suggest that fifty percent of your capital goes to bitcoin and then the remaining 50% just stick to US dollars more . Then place thirty percent of your bitcoins to other coins like ethereum, monero and others. The purpose of your dollar is when the price of bitcoin becomes lower then dont sell your bitcoin but use your remaining dollars to buy more bitcoins.

there are like there are when you hold gold for a long term, i see no difference here, usually those company don't hold anything they just dump to the ground every bitcoin penny they receive from their customers

also this apply to everything, to banks, stocks and every other categories, everything has risky not only because it's volatile...

Great strategy,I like how you explained it,the best way to reduce risk actually is knowledge,so if you have the knowledge what to do and how to regulate your different investments everything will fall into place,don't put it all in BTC-make sure you have other areas where you put your cash

Bitcoin is totally independent currency, there is no higher power behind it which will stabilize it - like we are used to with national currencies.
The only possible way for bitcoin to be less volatile to be used by more people, and spread coins distribution.
With higher market cap a single BTC trade will have a lesser effect on the price, it is the only real way.

The best way to reduce risk would be to diversify into the top 10 to 20 crypto coins based on Market Capitalization. You could go for 15 to 30% in bitcoin and then diversify into other cryptos such as ETH, Dash, ETC, LTC, XMR, ZCASH, XRP, etc. Here is a site that would help find the top coins based on Market Capitalization:  www.coinmarketcap.com

Bitcoins price is Rising and Falling, and it is normal when we are talking about bitcoin. So, the risk that you want to avoid or limit the decreasing of bitcoins price is not possible to limit or something. Bitcoins price depends on its investors, users, and its users population, the bigger the population, the bigger the price might increase. All you have to do is this situation is to be ready and accept the fact that in this world, there would be always increasing and decreasing, accepting it and facing the fact is more better than to fight it.

What is this hypothetical company of your's meant to do with its bitcoin btw? Is the business totally about bitcoin or it's planning to convert its fund to bitcoin and use that for operating the business? Regardless, it helps if it will diversify its investments and fund. If btc is meant for operation maybe just convert part of its operating budget into bitcoin and only use it for where it's really needed (for example, paying freelancers working abroad). If btc is the actual investment it might help to convert some of it into other cryptos. Sure the price gain may not be as high as btc but the price fluctuations wouldn't be as probably drastic.

If you can't keep bitcoin in exchanger than you can't just buy sell bitcoin whenever market moves significantly.  But if you can diversify your investment in at least top 5 alts you will be in pretty much safe place because alt and bitcoin price used to move in opposite direction.

Nobody knows when that can happen so probably not. Rhe only thing you can do is exchange BTC to USD instantly with every transaction you make, so that the profit doesn't change. For example you buy something for $5 (around 0.005BTC) and sell it for $15 (around 0.015BTC). Then exchange it instantly to USD so your profit won't go down.

Usually the companies that starts accepting bitcoin on their business
make deal with https://bitpay.com/ this service will convert automaticly to fiat money
when there are payment use bitcoin, I think this way is good to reduce risk
 because of fall in price for companies.

Making an agreement doesn't make the business risk free. Bitpay is just a support system which just gets bitcoin from the people and pay to the companies in fiat on basis of small commissioning in respect to the price variation. So based on the price at the time of purchase fiat will be transferred to the trader.

I hope again it is wrong step because exchanging btc to usd is the best option. Even though choose five 5 best altcoin, suddenly the price of altcoin reduces ultimately it will leads to loss, so better it a wise decision to convert them to USD.

Bitcoin nature is a risk in itself , companies has no control in the  price votality since its inevitable , to recover from certain price drop what you have to do is to HOLD you bitcoin until it reach your desired amount ! It already happen many times and it will happen again so when you the price is dropping there is no other way but to hold until it rise up again !

It is true that holding bitcoin for long term will certainly give you profit but if you want to exit in middle of the crash than there is no choice than taking the losses and leave. Holding is also not option always because if you need money you need it right now and you don't have any other choice than selling your bitcoin cheaper. Best option to limit this types of loss is to check bitcoin price and news daily and make necessary steps as per the situation.

Bitcoin has always been a risk since the creation of it , It already had risk if it will succed or not ! and bitcoin users has been living in risk for how many years now now but i am proud to say That Bitcoin has never let us down in every price drops It will soon come back on its price ! don't use Bitcoin if you don't like risks! there is a very plenty alternative in bitcoins that will reduce risk so better try that out

Even if bitcoins has a big value I think that dealing with it is a risk because we musn't forget that it's a virtual money so if you get problems, you can lose everything in a sec.

I doubt that diversification into other Alt coins will reduce the volatility of Bitcoin? It would actually add to the volatility if people jump in and out

of Alt coins and then back to Bitcoin. The best solution for volatility will be to distribute more coins to more people. You will just increase the risk

by investing in pump n dump Alt coins.  ::)