The demand for investment in cryptocurrency continues to grow not only among retail but also among institutional investors. According to a r...
The demand for investment in cryptocurrency continues to grow not only among retail but also among institutional investors. According to a recent survey by the Gemini cryptocurrency exchange, 14% of Americans have already invested in cryptocurrency and by the end of the year, this number may double. But buying crypto assets is different from investing in traditional financial instruments, writes RBC Crypto.
Experts named three main risks for an investor who decided to buy digital currency.
High volatility is a key feature of the cryptocurrency market, explained Ivan Petukhovsky, co-founder of the EXMO crypto exchange. The first recommendation he gave to novice crypto investors is not to panic, since it is very likely that a strong fall will be followed by equally strong growth. Before buying a coin, you need to evaluate the historical behavior of its price, as well as the average change per day/month, the expert recommends. According to him, this will help to understand the level of volatility and assess their readiness for such risks.
“Investors fearing volatility are advised to avoid trading in the cryptocurrency market, as volatility is its key characteristic. But it also helps to earn money, ”said Ivan Petukhovsky.
It is better to make the first investments in cryptocurrency on the spot market since margin trading in the absence of the necessary skills is likely to lead to losses, says the co-founder of the EXMO crypto exchange. And if on the spot market the losses will conditionally amount to one, then with margin trading, depending on the chosen leverage, you can lose dozens of times more.
It is unreliable to store digital assets on crypto-exchanges, warned the head of the Six Nines data center Sergey Troshin. According to him, while the cryptocurrency is on a third-party site, in fact, it does not belong to the investor.
“Your best bet is to store your crypto assets on a hardware wallet. The second option, if there is no desire to buy a special device, can be stored on your work computer - or on a separate one, which is rarely used, ”the expert noted.
If we are talking about trading, then it is necessary to take risks and the coins will have to be stored on crypto-exchanges, but if the plans are long-term, it is better to choose more reliable storage, advises Sergey Troshin.
Errors when sending funds
If an investor accidentally sent a cryptocurrency to the address in which a mistake was made, then it will be impossible to return the coins, they will burn, explained Mikhail Karkhalev, financial analyst of the Currency.com crypto exchange. According to him, there are no managing organizations and third parties on the blockchain who can be asked to cancel the transaction.