How to Protect Against Cryptocurrency Market Volatility

 Dipa Singha
  Aug 13, 2018


The cryptocurrency market continues to have ups and downs, causing some concern from crypto-holders. But the adoption of blockchain technology by companies, financial institutions, and governments is a clear indication that cryptocurrency is not going anywhere anytime soon.

Regardless of how volatile the market is, people are still flocking to a digital currency like Bitcoin, Ethereum, XRP, and other cryptocurrencies. Knowing how to protect against a volatile crypto-market is essential.

For example, the height of Bitcoin in January 2018 was ended by a massive decline in the digital currency’s value. Bitcoin dropped from nearly $20,000 to $9,000 by February 1, 2018, a very real indicator to just how volatile the cryptocurrency market is.

Do your hold cryptocurrency? Are you constantly looking for ways to keep your digital currency safe from the crypto-rollercoaster? The following tips can help you maintain value during those market shifts.

Exchange Crypto to Fiat Currency

One of the best ways to keep your cryptocurrency safe in a volatile market is to exchange your digital currency to fiat currency. This could be Bitcoin to USD, or Ethereum to Euros. This can keep your money safe during significant market drops, like seen earlier this year with Bitcoin.

“Money is simply the most liquid asset in a given place and time. Almost everyone accepts it as payment because they trust it, and they trust it because they know others accept it,” Patrick W. Watson said in a Forbes article.

Using your digital wallet, exchange large sums of cryptocurrency into the fiat currency of your choice. This is one of the best ways to keep your money safe from market volatility, but there are a few problems.

For instance, you may not be able to take full advantage of big spikes in crypto market value. Some exchanges and digital wallet platforms also charge fees for exchanging digital currency into fiat currency, so be sure to know the costs involved.

Utilize Stop Orders to Protect Your Money

You may associate stop orders with traditional stock market trading. However, stop orders are an effective way to protect your digital currency during market fluctuations. They are also not as complicated as they may seem.

Stop loss orders and buy stop orders are the two types of stop orders you can leverage to protect your money. Both types allow you to set parameters on your cryptocurrency. If you hold Bitcoin, but want to make sure you keep the best value, you can set buy and sell limits. How do stop orders work?

Let’s say you buy $50 of XRP, but don’t want to watch the market every minute of the day. To ensure you don’t lose your money in a volatile market, you simply set a stop loss order that will sell your XRP if its value hits $30. The same goes for buy stop orders, but buying instead of selling. It is essentially automated trading.

Hold on to Cryptocurrency Long-Term

There’s a lot of utility blockchain technology is serving up to companies, financial institutions, governments, etc., making a long-term cryptocurrency outlook advantageous.

Many digital currency and blockchain experts suggest this method of protecting your money in the current volatile crypto-market. But you should never use money you can’t afford to lose, since the market does fluctuate a lot, and quite often.

“Never invest more than you are willing/able to lose – Bitcoin is a very risky investment and you should keep in that in mind at all times,” Ofir Beigel of 99Bitcoins said.

The long-term is good, because when mainstream blockchain and cryptocurrency adoption does happen, the market could skyrocket. Just something as simple as a well-known influencer saying Bitcoin is the future can cause a significant increase in the digital currency’s market value.

A forward-thinking strategy can also keep market fluctuation stress out of it. Watching the market ups and downs can be exciting and disheartening, making a long-term, buy and forget strategy an optimal way to protect yourself from crypto-market volatility.

Be a Flexible Cryptocurrency Holder

Cryptocurrency will continue to have its ups and downs, at least until mainstream adoption happens. The number one way to protect yourself from the volatile market associated with digital currency is to stay flexible.

For example, having the ability to move your cryptocurrency around as needed with minimal exchange or digital wallet platform transaction fees attached. So in a way, to be a flexible digital currency holder, you need to have a flexible wallet platform.

Flexible digital wallet platforms have transparent policies, fee structures, and updates with an ethical reputation. A flexible digital wallet platform also has a wide variety of digital currency to choose from, as well as fiat currency choices. A diverse cryptocurrency portfolio allows you to move currency around for safekeeping.

Is Your Cryptocurrency Protected?

The more flexibility and control you have, the better protected you are from market volatility. The above strategies can serve as your guide to navigating those ups and downs.

There is no indicator that market fluctuations will ease over the next few years. Only time will tell. The more crypto and blockchain technology is adopted, the closer we will come to a more stable digital currency marketplace.

How to Protect Against Cryptocurrency Market Volatility

Dipa Singha

I am Dipa Singha, a professional writer; my passion for learning and sharing also made me a Writer and an Entrepreneur. I believe every one of us should share our experiences with the each other as it helps us evolve and learn more. I write on topics which are related to technology, finance, marketing and management.

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