• हिन्दी
  • ગુજરાતી
  • বাংলা
  • తెలుగు
  • मराठी
  • ಕನ್ನಡ
  • money9
  • Insurance
  • Saving
  • Loan
  • Mutual Funds
  • Investment
  • Breaking Briefs
downloadDownload The App
Close
  • Home
  • Videos
  • Podcast
  • Banking
  • Bulletin
  • Gold
  • Healthcare
  • Real Estate
  • Tax
  • Travel
  • Breaking Briefs
  • Insurance
  • Savings
  • Loan
  • Crypto
  • Investment
  • Mutual Funds
  • Real Estate
  • Tax
  • Exclusive
  • Home / Investment }

Necessities of Crypto Investments with Risk Management in The Volatile Market

As time progressed, crypto markets have been more closely linked with the global economy and have been affected by economic forces

  • Manoj Dalmia
  • Last Updated : December 3, 2021, 16:34 IST
  • Follow
Necessities of Crypto Investments with Risk Management in The Volatile Market
Bitcoin and many other crypto assets are scarce. When the stock market falls or rises, the price of cryptocurrencies remains largely unaffected by it and are usually negatively correlated. Thus, making them an excellent tool for portfolio diversification alongside commodities.
  • Follow

Crypto assets are evolving in an unprecedented manner. With fast Innovation new words keep getting added in the crypto glossary seemingly every week.

Crypto assets emerged as a decentralized alternative to fiat currencies. Although they were mostly used for transactions, their values began to fluctuate based on market demands, similar to the traditional financial market. As time progressed, crypto markets have been more closely linked with the global economy and have been affected by economic forces.

Why is Crypto in your Portfolio a necessity?

Most Crypto Investors invest in cryptos having 58% stocks, 37% Debt, and 5% Bitcoins, instead of 60/40 stocks and debt. The Ratio can vary substantially with varying risk appetite.

Just 5% of Bitcoins added to your portfolio may be enough to shield you from devaluation. However, this is not investment advice but a way to put things in perspective.

Bitcoin and many other crypto assets are scarce. When the stock market falls or rises, the price of cryptocurrencies remains largely unaffected by it and are usually negatively correlated. Thus, making them an excellent tool for portfolio diversification alongside commodities.

Investing in Cryptos? Don’t forget to manage your risks.

The Crypto trading community is exposed to various financial risks if left unmanaged. Managing risk in Crypto is almost similar to managing any tradable instrument in the market along with some variations

Risk to reward Risk reward ratio = (Target price – Entry price)/(Entry price – stop loss)

A good setup for crypto trades usually contains a decent risk-reward ratio, and the rewards are worth the wait. Ignore the trades where the risk-reward ratio is less than 1:1 as this may result in capital erosion in due course of time. Even with a higher losing streak you may make a profit.

Capital Allocation

Right capital allocation is necessary for risk management in crypto trading. Markets are continuously in motion and the market environment is constantly changing. Allocating capital on the right project and assets is necessary rather than keeping hope on a stanganat project hoping it will miraculously bounce back.

Position Sizing

Investors should not deposit a large part of their trading capital in crypto trading thinking of making huge returns. Never put all your eggs in one basket. This is a risky strategy that puts your finances in jeopardy.

 Trading on Multiple Time Frames

Multiple time frame research helps avoid tunnel vision because it’s all too easy to get caught up in a single time frame and miss the bigger picture of the market trend. Higher the time frame the lower the noise will be.

 Stop Loss and Trailing

It is always advised to put a stop-loss order for your every trade. It is the most important aspect of risk management since it allows the trader to limit the risks of unexpected turns of events which have been part of the envisioned trade plan.

Portfolio Setup

Investors can further allocate funds in a planned way where they can decide how to diversify their crypto holdings to maximise returns. The following sample is purely indicative and does not qualify as investment advice.

  • 30% BTC (Long Term HODL)
  • 20% BTC (Take Profit at High)
  • 15% Fiat / Stable Coins (Reserved for buying the dip)
  • 20% Large – Mid market cap alt coins
  • 15% Defi/NFTs

Before jumping into investing, it is imperative to understand that crypto investing does not have the same regulatory protections stock investors are familiar with. Crypto investing is highly risky and volatile. Given all of this, beginners in the industry must take precautions to protect their hard-earned capital.

(The article is written by Manoj Dalmia, Founder & Director, Proassetz exchange, views are his own)

Published December 3, 2021, 16:34 IST

Download Money9 App for the latest updates on Personal Finance.

  • Bitcoin
  • cryptocurrency
  • ethereum

Related

  • No hike in RoI on PPF in Q3 FY24: GoI
  • Govt securities of 50-year tenure highlight in borrowing target of FinMin in H2 of FY24
  • How multicap is different from multi-asset allocation fund
  • Investment Reflections from Lord Ganesha
  • OPS harmful in the long-run, says RBI
  • In FY23, most FDI came from US, Mauritius and UK: RBI study

Latest

  • 1. Can you withdraw money from PPF before 15 years?
  • 2. Eat, Drink & Earn!
  • 3. Which One To Choose?
  • 4. EMI Even on Debit Card!
  • 5. How is interest calculated in your PF account?

Trending 9

  • Car prices set to increase
    1 Car prices set to increase
    Passenger vehicles (PVs) and two wheelers (2Ws) can become further costlier towards the later part of the current calendar year.
    Automobiles
    alternate

    Read

  • 2Corporate participation in NPS at 12-month high: NSO
    Retirement
    read_icon

    Read

  • 3Banks exploring a risk assessment model to fund startups
    Analysis
    read_icon

    Read

  • 4How should you utilise bonus of your participating insurance policy?
    Insurance
    read_icon

    Read

  • 511 managers, tier-2 default scheme: All that’s happening with NPS
    Exclusive
    read_icon

    Read

  • 6e-gaming companies might face tax demand of Rs 1.5 lakh crore
    Tax
    read_icon

    Read

  • 7Foreigners getting attracted to realty stocks
    Analysis
    read_icon

    Read

  • 8Govt bonds in JP Morgan’s bond index could also support Indian currency
    Economy
    read_icon

    Read

  • 9VI lost 13 lakh subscribers in July ’23 while Jio gained 39 lakh
    Analysis
    read_icon

    Read

Exclusive

Don't get conned on social media
Don’t get conned on social media
Utility
read_icon

Read

Identify your risk through a risk-o-meter, but don’t make it the sole criterion
Mutual Funds
read_icon

Read

Tax on income from gifts to minors
Tax
read_icon

Read

When is it wise to repay home loan prematurely?
Loans
read_icon

Read

Beware of fraud while shopping online
Exclusive
read_icon

Read

  • Trending Stories

  • How can you save on taxes on alimony that you receive on divorce?
  • How can you save on taxes on alimony that you receive on divorce?
  • Don’t get conned on social media
  • How cyber thugs con you on your social media complaints?
  • Car prices set to increase
  • TV9 Sites

  • TV9 Hindi
  • TV9Telugu.com
  • TV9 Marathi
  • TV9 Gujarati
  • TV9 Kannada
  • TV9 Bangla
  • News9 Live
  • Trends9
  • Money9 Sites

  • Money9 Hindi
  • Money9 English
  • Money9 Marathi
  • Money9 Telugu
  • Money9 Gujarati
  • Money9 Kannada
  • Money9 Bangla
  • Topics

  • Insurance
  • Savings
  • Loan
  • Stocks
  • Mutual Funds
  • Real Estate
  • Tax
  • Crypto
  • Exclusive
  • Follow us

  • FaceBook
  • Twitter
  • Youtube
  • Instagram
  • Linkedin
  • Download App

  • play_store
  • App_store
  • Contact Us
  • About Us
  • Advertise With Us
  • Privacy & Cookies Notice
  • Complaint Redressal
  • Copyright © 2023 Money9. All rights reserved.
  • share
  • Facebook
  • Twitter
  • Whatsapp
  • LinkedIn
  • Telegram
close