Risk In Cryptocurrency Investment

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When it comes to investing in cryptocurrency it comes with it's own risk, as many people just flock into cryptocurrency space ignorant of the risks involved in investing in this space, just like any other asset class that investing in it comes with it's own risk even traditional asset class comes with a measure of risk.

From stocks and company asset all this things comes with risk like every other investment done in the financial market it's majorly left for us to learn how to majorly navigate ourselves on the best investment choice and know if we can handle the risk that comes with it, not just being able to handle but knowing if the risk is well worth it at the end of the day.

So my point being that investing in cryptocurrency is no different and carries huge risk with it, the cryptocurrency market is highly speculative so when entering the space it's good to know some of the risk that comes with cryptocurrency investment and know if it's something we can navigate through and that we can manage.

We have to know if we have emotional discipline enough and is willing to accept this risk them if we are then we are good to go after proper and analytical research, I will be drawing our attention today on those risks that comes with cryptocurrency investment.

Investing in cryptocurrencies involves a range of risks that investors should be aware of before committing their money. Here’s a detailed look at the primary risks associated with cryptocurrency investments:

Some risk that comes with investing in cryptocurrency

Cryptocurrency investment risk

One of the risk associated with cryptocurrency investment have to do with the very nature of cryptocurrency itself, we often experience extreme volatility in this market anyone who has been around even if it's just this year would have known that, that is the the unpredictability of cryptocurrency prices.

The cryptocurrency market is very unpredictable and often moves in a very volatile manner, sometimes to the upside and other times to the downside often in manners we don't expect, they move with such speed that we might easily get burnt if we are positioned wrongly or find ourself invested in the wrong project that is why it's important to be careful on the project we are investing it. So for a fact the extreme market volatility of the cryptocurrency space makes it a really risky investment one we need to be aware of, we could make mad gains from the investment and also suffer great loss as well that's financially.

Another reason why there is risk in investing in cryptocurrency is the unsure or unclear regulatory framework guiding cryptocurrency which keeps changing constantly as in a country where there is good regulation of cryptocurrency could easily change and when the regulations suddenly changes in regards to a crypto asset it affect that coin drastically in terms of price and often lead to market dumps and for those invested in them it could lead to great financial loss.

So regulatory uncertainty is one of the reasons why cryptocurrency investment is a risky one when compared to traditional asset class which is properly regulated, cryptocurrency regulations is unclear and often contribute to the riskiness of the investment into cryptocurrency which we should be aware of.

Another risks involved in this space that's when it comes to investing in cryptocurrency is it could come with a level of security issues and sometimes for many who are not experienced enough there account where there asset is stored is hacked and they lose everything which could be really heartbreaking.

Yes indeed investment into cryptocurrency is risky due to the security risks involved, as hackers, fraudsters and scammers and other malicious users are constantly looking for ways to steal people's digital asset requiring one is on alert at all times and at times the security measures needed to take is unfamiliar to many and needs alot of getting used to so they will be able to properly guide their asset but some times as we have seen people lose focus and this malicious users gains access to their account and do away with their funds which result in great financial loss which is one of the risk that comes with investing in cryptocurrency.

Cryptocurrency investment is more like a kind of investment where you are on your own, it's decentralized and that means you are your own insurance, the measure you take is what will insure and protect you from loss and there is no insurance from anyone against loss of asset you and you alone will bear the consequences of Losing your funds.

There is no consumer protection that comes with investing in cryptocurrency, every consumer has to protect their selves, and this is why many choose not to as is different from what they are used to, normally used to investing where there is insurance policy Incase things go wrong like in traditional asset, in cryptocurrency things are not that way and when things goes wrong the individual bears the grunt, take the case of lunc for example where because of the wrong decision of the team people incurred loss worth millions and billions of dollars and no insurance, their money just vanish like that.

So investment in cryptocurrency carries great risk you should know, it's good to know that risk and know too that consumer protection rights are not offered here so you will be properly guided.

Cryptocurrency market is let's say out of all financial digital traded asset is one of the easily manipulated market ever so far, this is especially true for newer project and here we have often heard of terms like pump and dump schemes, it happens all to well here.

Most whales easily manipulate the market especially small project coins by hyping or sometimes even buying in on this coins while hyping it as well only for the coin to pump to an exceedingly high level and what happens is that at the end of the day after they have made people buy in to this coin they would sell off resulting in market capitulation since they are the major holders of this coin which is another risk that comes with cryptocurrency investment, though this happens majorly on small coins as they are easily manipulated.

So it's wise we are aware of these risks that comes with investing in cryptocurrency before deciding to venture into this space.

Conclusion

Ofcourse most of the risks involved in cryptocurrency investment could actually be properly mitigated if one actually carries out proper research and remains guided to new updates and changing development, try not to be left behind that's the way to go and carry out proper research before investing in any project this I believe would help greatly.