Volatility in the cryptocurrency market is no secret. Investors and market observers are well aware of the rollercoaster ride the value of crypto has taken since exchanges began in 2010.
Although it rises and falls in the short term, the long term increases are what attracts and excites so many people about crypto.
Take Bitcoin for example – the mean annual return is 93.8 per cent. This sits between the minimum and maximum returns, which are vastly different – 72.6 per cent and 302.8 per cent respectively.
Since 2018 Bitcoin returns have gone from strength to strength, growing from -72.6 per cent in 2018 to 87.2 per cent in 2019. In 2020 returns were up by 302.8 per cent and in 2021, 57.6 per cent.
It explains the increasing popularity behind crypto, despite its inherent volatility.
Understandably, many people react to this volatility with their emotions. They make rash trading decisions based on fear, uncertainty or doubt. They may suddenly veer from their trading plans or sell their crypto at the bottom.
All of these emotion-charged decisions are costly and usually, stressful.
But like any investment market, the ups and downs of crypto can be planned for and managed to mitigate losses.
Australian crypto exchange Cointree has developed a suite of tools that help people improve their trading and stay cool, calm and collected – even when investments take wild swings.
Auto trades are a great way to get started. Cointree’s Dollar-Cost Averaging Strategy removes the emotions from your investment decisions. It’s ideal for those who are seeking discipline to their investment skills and may not have the time to closely follow the market.
The Dollar-Cost Averaging Strategy involves making regular small investments over time, rather than large purchases. This means the dollar cost of the investment is averaged out over time.
It uses recurring buys that lets investors make automatic crypto purchases every day, week, or month.
Dollar-cost averaging is a popular strategy, particularly for those with a long-term view, because it reduces the impact of volatility.
In addition to this, Cointree also has price alerts and auto-trading features allowing investors to limit their risks and maximise their gains without watching the market 24/7. Auto-trades give investors peace of mind that their trades will go ahead safely and smartly, letting them lock in profits and lessen losses.
Another useful tool is the Crypto Fear and Greed Index. It gauges bitcoin sentiment from extreme fear to extreme greed, and provides an index score between 0 to 100. Crypto traders use the index to help them find the right time to enter and exit the market.
All of the above tools are much more practical when used in conjunction with self-awareness. An investor who knows their goals and risk tolerance can adopt an trading strategy that suits them.
Cointree has identified 11 types of crypto investors and while no archetype is ever 100 per cent accurate, knowing these traits can help you identify some tools that are especially useful to you.
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