Cryptocurrency has an integral relation with volatility. A cryptocurrency crash generally takes place on the weekend. The phenomenon is increasingly gaining ground and adding to the risk factor. The weekend dips have a significant effect on market regulation. The value of Bitcoin has a lot to do with these events. Hence, when you have a comprehensive understanding of these crashes, it will help you protect yourself and cut down on your risk factor Ian Mausner.
The best way of decreasing risk is by limiting your weekend trading
If you want to reduce the risk of losing capital in this market, you must trade less on the weekends. It is because Bitcoin is volatile, and the prices go up and down. When you have fewer trades, you have a better possibility of gaining profit. Since the banks are not operating on the weekend, Ian Mausnersays there will be more miniature trading. You have to take the opportunity to strategize plans for your weekdays. Understand the influence of the market on the transaction. If it is towards the negative side, stay away from trading.
Focus on the margin when you are trading
Various traders invest their money in cryptocurrency on a margin. Hence, they borrow money, buy assets and then pay it back. When the prices of Bitcoin go down, these traders repay their loans. Thus, it is an effective way to gain high returns. However, since financial institutions are closed at the weekend, you may struggle to repay your loans during these times. Hence, you may have to sell off your exchange to repay the loans.
Market manipulation
The market is the most critical factor which determines cryptocurrency prices. Various studies reveal the link between these two facets. If you grab a look at research studies, you will understand that higher demand for cryptocurrency leads to lower prices. You have to understand the extent of market operation for making sound decisions. Moreover, fake selling and purchasing of cryptocurrency also affect their values. Ian Mausnerstates that it creates false demand and supply, which further affects the market situation. It happens during the weekend and thereby creates a trigger in the market. Hence, you have to take care of these factors when investing your money in cryptocurrency.
Exchange-traded fund and its impact on cryptocurrency
ETF or exchange-traded fund has an integral relation with cryptocurrency. When the ETF trading goes down, investors use their money in selling and purchasing cryptocurrency each day. For instance, if the market goes down by 20%, eager sellers will let off their cryptocurrency assets. When the market resumes work on the following Monday, you will have buyers in a queue. Exchange and securities have also started playing a vital role in the regulation of the market these days.
Since cryptocurrency is available 24/7, you can trade in them at any time. However, what you require is a comprehensive plan and guidelines to direct you in the process. A periodic examination of your strategy will help you modify the same according to the needs and demand of the market, says Ian Mausner. It has become essential for operating in the cryptocurrency market.