How to understand risk in crypto

[cocoadreamboy]

********************NEWEST UPDATE*********************
Ok bitcointalk! I have been hard at work over this last week. I have just put the finishing touches on my site!

I will be posting a new topic soon about how to identify pricing bottoms by utilizing the creation cost. It needs a couple more revisions, but it will be ready today or tomorrow.

Here is the link to my site again:

https://www.amsinger.org

As always I love your opinions and criticism. You need friction to make fire

Aaron

P.S. The next client research will be covering the price volatility increases when bitcoin is high above the creation cost.

*******************************************************

*****************UPDATE*******************

Thanks so much everyone for your opinions and views!

I am setting up a complete redesign of the site, and I will be back in around a week with all new research and probing bitcoin questions.

The site will be down while I make all the upgrades and rebalance the scales.

Bitcointalk is one of the few places where you can go to meet crypto people. I am honored to speak and share my data and views with you all!

Love and hard work,

Aaron

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Here is an overview of how to find and UNDERSTAND your risk while investing in crypto. If you want to see how it works click this link:



I have previous posts on here explaining an optimal entry point based on fundamentals on Feb 7. This is an explanation of May 2 to May 27.

Creation Cost - The variable cost it takes to create a bitcoin

On May 2 BTC risk hit its lowest since February. BTC was 15.1% above its price floor This is a rare and likely profitable situation. The price floor represents the price at which whales start buying due to the natural cash flow of cryptocurrency. It represents the point of strongest buying capability in the market.

On May 27, after the 59% price spike, the risk level increased to 55.5%. The price had virtually no support and due to the high price every miner and holder with any awareness of risk levels was selling and not holding.

I created fundamental analysis in order to provide my clients the information that they need to measure risk and understand the crypto market. With the fundamental price floor you know automatically if the price is low or high. $3000/BTC was INCREDIBLY high 4 years ago, $3000/BTC now is a mortgage-your-house steal. With price floor and cash flow analysis my clients know when the market is high and when it is low.

I truly hope that you find this information useful to you. I made this because of the pain I felt in Nov 2018. I needed to know why it didn't go to zero, and I found the price floor.

Aaron

Helpful Links:

[cocoadreamboy]

I hope that bumping is allowed, because I believe that this is an important topic especially recently.

[Payme21]

This information is timely as a number of people could benefit, at least educationally. Practically speaking, bitcoin prises can defile technical analysis which means there is always an amount of risk attached to trading

[cocoadreamboy]

This information is timely as a number of people could benefit, at least educationally. Practically speaking, bitcoin prises can defile technical analysis which means there is always an amount of risk attached to trading

Very true. Understanding risk is the cornerstone of ANY investment. I can't stop the mania, but I can help people profit from it.

[Kiefner]

This topic will always be relevant. Many people are not able to understand and correctly identify their risks. This is a whole separate science. You are right to spread this information.

[cocoadreamboy]

This topic will always be relevant. Many people are not able to understand and correctly identify their risks. This is a whole separate science. You are right to spread this information.

I am honored by your responses. It is good when experienced people say such kind words.

Aaron

[tiedcoin]

Several critical risks plague this asset class and stand in the way of broader market adoption and stability.

Risks that jeopardize cryptocurrencies and stand in the way of market progress are:

Technological Risks: The computational complexity and energy consumption of bitcoin mining are some of the technical limitations of cryptocurrencies. For this, investors should be aware of technological risks and false promises of decentralization that are being made in many projects.

Human Error: At the crypto whale end of the market, the high profile nature and public quality of large asset holders may expose people to direct physical security threats, such as ransom or extortion.

Care, Custody, and Control: Apart from the intangible nature of cryptocurrencies, one of the major issues in the market is care, custody, and control. Not every crypto investor can afford this level of security, but all are subject to the emerging nature of custody, and control.

[cocoadreamboy]

Several critical risks plague this asset class and stand in the way of broader market adoption and stability.

Risks that jeopardize cryptocurrencies and stand in the way of market progress are:

Technological Risks: The computational complexity and energy consumption of bitcoin mining are some of the technical limitations of cryptocurrencies. For this, investors should be aware of technological risks and false promises of decentralization that are being made in many projects.

Human Error: At the crypto whale end of the market, the high profile nature and public quality of large asset holders may expose people to direct physical security threats, such as ransom or extortion.

Care, Custody, and Control: Apart from the intangible nature of cryptocurrencies, one of the major issues in the market is care, custody, and control. Not every crypto investor can afford this level of security, but all are subject to the emerging nature of custody, and control.

This topic was aimed more at analyzing the financial risk of crypto and less the infrastructural and logistical risks.

Apologies if it wasn't clear,

Aaron

[Ghebung Masam]

in fact every investment must have a risk but how do we minimize the risk by analyzing and predicting a surge in prices and when we have to buy and sell.

[cocoadreamboy]

in fact every investment must have a risk but how do we minimize the risk by analyzing and predicting a surge in prices and when we have to buy and sell.

The purpose of my site and all my posts is to show people that the creation cost forms the basis for understanding risk. It is highly unlikely someone will be selling new Ford Fusions for less than it costs Ford to make a Ford Fusion. Bitcoin is no different.

If you know the creation cost, you know how low it can go. If you know how low it can go, you can gauge the risk of your investment. I demonstrate that here on my site:

https://www.amsinger.org/sample-analysis

Please give it a look when you have a chance and see that it is very possible and important to gauge risk in crypto.

Pleasure talking to you,

Aaron

P.S. Low risk is generally good to buy, high risk is generally good to sell.

[kryptqnick]

I think it's a nice initiative to talk to people about important things they should do before investing. And risk assessment is definitely crucial (when you invest, you gotta know what your 'odds' are, so to speak). Yet this topic seems to be overlooked very often. When people discuss investments, they usually stress the importance of doing research on what kind of coin this is, what is its market cap, use cases, dev team, etc. But not "what are the chances this coin will go up or down". I am not sure that it's possible to predict the risks accurately, though, but even trying to do so is better than completely neglecting this aspect.

[cocoadreamboy]

The main rule - crypto is always a huge risk coz the market's too volatile.

If you know the creation cost, you know your risk. After entering low risk you profit off the volatility. That is the type of information I give my clients.

Volatility is to be profited off not be afraid of.

Aaron

[cocoadreamboy]

I think it's a nice initiative to talk to people about important things they should do before investing. And risk assessment is definitely crucial (when you invest, you gotta know what your 'odds' are, so to speak). Yet this topic seems to be overlooked very often. When people discuss investments, they usually stress the importance of doing research on what kind of coin this is, what is its market cap, use cases, dev team, etc. But not "what are the chances this coin will go up or down". I am not sure that it's possible to predict the risks accurately, though, but even trying to do so is better than completely neglecting this aspect.

Only very rarely are the most efficient creation costs crossed by the price. That is a true nature of almost any market. No new car is sold at cost by Ford. No new bitcoin is sold at cost by the "Ford" of bitcoin mining.

I give my information to my clients to minimize their risk and increase their confidence in their trading. I can't wait for the market to fully correct and my clients know when the bottom is in using similar data to the data in this link:

https://www.amsinger.org/open-research

I hope that I have given you a bit more confidence in your trading too

Aaron

[kingpin4321]

Understanding you risk is knowing the price at when to buy and price at when to sell never be greedy or over ambitious this would spell trouble for any investor also know that everything is a risk here but we still have to make a decision

[cocoadreamboy]

Understanding you risk is knowing the price at when to buy and price at when to sell never be greedy or over ambitious this would spell trouble for any investor also know that everything is a risk here but we still have to make a decision

What are you making a decision based on my friend? If you don't have numbers and cash flow analysis for an investment you are flying blind. I am trying to get people to use risk in crypto so they can understand why these type of situations happen.

Without risk analysis how do you know what is high or low?

please, please, please, use the numbers

Link is up top,

Aaron

[lucho1592]

Frankly speaking, I still do not understand all the risks of crypto investments. But I hope that this knowledge will come to me eventually

[Nellayar]

The higher the risk, the more it will be profitable. Cryptocurrency is a risky investment. We need to understand that if we invest in cryptocurrency, we can lose our capital. That is why we need to know it before we enter. Some of our fellow traders take this investment as an easy money. So, they never assumed that they will be lost when they will create mistakes.

[lepbagong]

Understanding you risk is knowing the price at when to buy and price at when to sell never be greedy or over ambitious this would spell trouble for any investor also know that everything is a risk here but we still have to make a decision

but the risk in crypto is not only from knowing the price when buying and the price when selling it. more broadly it is clear what happens with crypto we also have to understand. like nowadays crypto is often used as a fraud because the number of projects that are running and what is obtained is not comparable so it becomes a scam. so to join Crypto must be prepared to not be lazy to do research so that it does not happen with the unwanted.

[izanagi narukami]

It's difficult to predict !

That's the risk you need to attempt when you decide to invest on crypto.
For example : I've invest on bitcoin over 5 years and it's really amazing experience so far !

With some regret make me to determine what action I will do in the future ( HOLD )

[BrewMaster]

i am wondering whether anybody is going to buy what you are selling them here which is your guesswork. specially now that in less than 2 weeks  you have a terrible track record of always predicting the wrong thing.