Risk in Crypto Assets Portfolio

[Wenbing]

I have seen there whatever has a huge upside also has a huge downside. This is the case with crypto currency, including bitcoin.

Can we point out the risks that one faces in investing crypto assets based on these:

1. As a retail investor

2. As an asset manager (hedge fund business)

3. As a trader.

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[mk4]

Answer to every single point: the volatile nature of cryptocurrencies, as per usual. If you go in with a huge allocation and it ended up crashing down temporarily/permanently, then you're probably screwed depending on your circumstances and depending on which specific coin/token you actually invested in.

As for a trader, well, if you use stop losses and you trade really well to start with then you should be fine.

[Wenbing]

Thank you.

Stop loss and take profit options should really be helpful to minimize the risk and maximise the profit in either trading or holding.

[Gozie51]

Thank you.

Stop loss and take profit options should really be helpful to minimize the risk and maximise the profit in either trading or holding.

I think that helps to safe from  crashing out totally but investors who like hodling like I do have no worries if you are a short time hodler. Having your coins in bitcoin or Ethereum is more financial appropriate for the crypto currency business than having it scattered in altcoins that have no real value.

This is looking you can take the thread to trading discussion board for the traders delight.

[OcTradism]

Don't put your portfolio at risk because you use leverage.

You must allocate most of capital to Bitcoin and some altcoins that are backed by crypto exchanges. If crypto industry is here, and if crypto exchanges survive in the market, those altcoins will grow.

Why grow? Because when the industry grows, crypto exchanges will grow too and their own-built coins will grow in value.

[isaac_clarke22]

I have seen there whatever has a huge upside also has a huge downside. This is the case with crypto currency, including bitcoin.

Can we point out the risks that one faces in investing crypto assets based on these:

1. As a retail investor

2. As an asset manager (hedge fund business)

3. As a trader.

As mk4 said, it is always going to point out to a single factor which is the unstable price.

For traders, it is more of technical stuff depending on how s/he is responsible to his/er own fund. It would be the hacks that happens in exchanges and one worth mentioning under those hacks is the MITM or Man In The Middle attack. It is not directly price-wise risks, but you know what since you are generally talking about all the risks I just put it in here as well.

[Ararbermas]

For me as a trader there's always a chance to minimise losses by using stop loss, but when it comes investing probably it depends, wherein if you make technical analysis first before you put money probably you can assure your money is safe from the volatility or if there's a massive down in the market, especially if you get the real strong support level of the coin because for sure it will always bouncing back and will seek for new resistance for long time, but monitoring the growth still a must for investors.. Unlike traders by using stop loss it makes very comfortable..

[zanezane]

As a trader, the risk that we face is that we're unsure whether we did the right thing right after we buy the crypto and at the same time the risk of hype, where some traders might be too late for the hype. Another risk which is for everyone is the volatility, it's a neutral thing that can't be tamed but you will be able to use it to your advantage.

[ChiBitCTy]

I have seen there whatever has a huge upside also has a huge downside. This is the case with crypto currency, including bitcoin.

Can we point out the risks that one faces in investing crypto assets based on these:

1. As a retail investor

2. As an asset manager (hedge fund business)

3. As a trader.

I think as others have already pointed out, there is volatility risk for each one of these.  As a retail investor your risk becomes a possibility at a couple levels, and being a retail investor doesn't mean you're not a "trader".. the two can go together.  You have risk when you buy any investment and bitcoin is no different.  You have the possibility of risk whether you hold for a short amount of time or long.  As an asset manager you've got a fund to manage and other peoples monies at stake.  So, there much more risk so to speak in that scenario.

[ethereumhunter]

Thank you.

Stop loss and take profit options should really be helpful to minimize the risk and maximise the profit in either trading or holding.

The problem is that many traders do not use that feature instead of selling their coins without using stop loss and often sell at a lower price. That makes them unable to manage the risk from the coin and if they do not learn for more, they will lose a chance to make a profit later. Having a portfolio in crypto means we need to know that the price will always be volatile and it is our job to minimize the risk but it is not easy as that will need more experience to reduce the risk.

[taufik123]

As a trader, the risk that we face is that we're unsure whether we did the right thing right after we buy the crypto and at the same time the risk of hype, where some traders might be too late for the hype. Another risk which is for everyone is the volatility, it's a neutral thing that can't be tamed but you will be able to use it to your advantage.

If you are not sure what to do, about the coins you bought at that time, then you don't understand how to do research before investing or buying coins. Research really needs to be done, doing analysis is the first thing that must be done.
the risk of hype will always occur. For brands that are late in the hype and continue to buy at high prices, it is a risk that must be accepted. Crypto price fluctuations are very fast due to high volatility.
High volatility can be put to good use for experienced traders, they will benefit from every ups and down of the coins traded.

[noorman0]

Thank you.

Stop loss and take profit options should really be helpful to minimize the risk and maximise the profit in either trading or holding.

But you are putting your portfolios at more risk than losing value. Trading and holding are different activities in terms of timeframe, you have to do it separately. Centralized exchanges are not good for holding long term. Sometimes centralized services turn out to be sensitive to accounts that are suddenly active after a long period of "silent".

[fiulpro]

Honestly there are risks in every single investment that you are making and when it comes to bitcoins I think the top two would be :
1. legal issues
( From the side of the government)
2. Issues regarding volatility and manipulation as well
...
The fact is not all countries are crypto friendly and thus at the end of the day people might have to pay huge taxes or even sell their assets before time with the government suddenly decide to ban it. ( They usually give a time period but that's only bad since the price keeps going down eventually and you end up in a loss )

The Volatility is something that is not only a boon for the traders but at the same time it might cause a lot of probelms as well, since if you are not vigilant, you can loose a lot, faster than ever. Therefore if you do know how to use it, it's perfect, but if you are a new trader then you have to take it slow and learn from your mistakes along the way.

Most people who trade are also holding, therefore your portfolio is actually in your own hands, you can decide to tackle it from different angles and when you think you are loosing a lot, just stop and see where you are doing mistakes, I think it's all about learning and experience.

[teosanru]

I have seen there whatever has a huge upside also has a huge downside. This is the case with crypto currency, including bitcoin.

Can we point out the risks that one faces in investing crypto assets based on these:

1. As a retail investor

2. As an asset manager (hedge fund business)

3. As a trader.

1. A retail investors has something called an urgency risk, generally, these people tend to HODL but there could be a situation where these people need money but at that time there is a big slump or bear run going on in the market and this person has no other option than to withdraw money from the market, This is a huge risk that a retail investor carries.

2. An Asset Manager obviously carries the Unsystematic risk, they try to beat the market in the long run but if a person who could have simply held on to his investment and not sold makes a similar return to what an Asset manager gives, this is a complete failure on part of the asset manager.

3. A trader carries the volatility risk in the market, that it's strategy might have become obsolete due to change in the trend of the market therefore no matter what his trading would always result in losses.

[Fortify]

I have seen there whatever has a huge upside also has a huge downside. This is the case with crypto currency, including bitcoin.

Can we point out the risks that one faces in investing crypto assets based on these:

1. As a retail investor

2. As an asset manager (hedge fund business)

3. As a trader.

Retail investors should only allocate a small portion of their total assets to cryptocurrency, say 5-10% because it has such a high volatility - may consider it a replacement for gold in your portfolio. An asset manager would also hold a rather small portion, unless their fund was specifically designed as a high risk and potentially high return vehicle - that way investors would be aware they could lose a large chunk of their money if they park it there. A really profitable trader can make money in any sort of market as long as long and short positions are available, however the amount of people who are successful at this activity are probably in the hundreds or low thousands across the whole world, plus it can be extremely stressful.

[The Cryptovator]

It does not matter what kind of investor you are. It's because all kind of investment is included in risk. We can't avoid the risk due to the volatile behavior of cryptocurrency.  The risk totally depends on how you are managing your assets. If you are just a trader then you have to think about how you can make a profit within a short time. If you are an investor of the middle term then you have to take the advantage of the volatility. If you can't take advantage of the volatility then you are at risk. If you are a long-time investor then you have to wait with patience, but everywhere is risk involved because cryptocurrency is unpredictable actually, whatever we predict that is not accurate ever.

[Furious 7]

As an investor, of course, I prefer bitcoin as an investment because it is one of the most popular and well-known coins. I will hold it for longer and if things go bad as long as there is a time, bitcoin will definitely come back to go up, so I will hesitate if I choose a coin except BTC.

As a trader, in general there is always a stop loss option to prevent losses where when something bad happens it will definitely have a quick impact, I certainly need to analyze certain coins where to trade but in this option there is still a lot to do including by entering hype and also other fomo.

[DarkDays]

Answer to every single point: the volatile nature of cryptocurrencies, as per usual. If you go in with a huge allocation and it ended up crashing down temporarily/permanently, then you're probably screwed depending on your circumstances and depending on which specific coin/token you actually invested in.

As for a trader, well, if you use stop losses and you trade really well to start with then you should be fine.

The point you make about adding a stop loss to trades being a way of protection against unnecessary risk id true. However, the opposite is true.

Because the crypto markets are so volatile a stop loss can trigger liquidation before shooting up again, yes, it happened in the past that profit in this way was not maximised and thus that window of opportunity was missed. So a stop loss should be regarded with both its pros/cons, a stop loss is not a safe haven for traders but a strategy that comes with its own risk and benefit.

[boyptc]

Just be an individual that invests on it. No one to hold your asset and you're the one that's responsible for every action you do with your portfolio.



I don't have experience in asset managers and no plans of using any of their service.

[electronicash]

it no matter who you are whether you are a retail investor, a fund manager, or a trader the risk is the same, you lose money/clients when you don't know when to exit your trade when the market is beginning to collapse so the outcome is the same, loss.

the risk is what drives the thrill in trading cryptocurrencies, you enjoy the ride or loss more when holding the coins for a long time. determining when to buy and sell will always be a good tool for us.