How to Minimize the Risk In Cryptocurrency Investment

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In order to profit from cryptocurrency investment, you need to learn how to minimize the risk. How do you minimize the risk in cryptocurrency investment?

Here are a few tips based on my experience

Invest in the right crypto coin or token

Tron is a blockchain platform with a native currency called TRX. The current price of TRX is 6 cents (the price has gone up by 2.12 percent in the last 24 hours). It has a market cap of 6.2 billion USD and ranks 26th on the market cap rank. It does not have a capped max supply, and the current circulating supply is 100 billion TRX. Since it has a good transaction speed with a low transaction fee, TRX can be considered a good investment. However, I do not see that you can actually benefit from long-term investment because of its unlimited supply. When a coin is in unlimited supply, the value does not really go up, even if it goes up it is only through market manipulation. Therefore, you may not profit much from TRX investment.

Just like TRX, Doge also does not have a max cap. Currently, doge has a market cap of 16 billion and a market rank of 13, and a market price of 12 cents. The current market cap is 16 billion USD. When Doge had reached an all-time high with 68 cents, it has a market cap of 48 billion and a market rank of 5. Since doge does not make max cap, I don't think the price will go very high. If you think Doge will become $1, you might be wrong.

Earn Profits From Your Assets to Minimize the Risk

With crypto, there are many ways to manage the risk. For instance, if you invest in top coins according to coin market cap, for instance, Bitcoin (1st), Ethereum (2nd), BNB (4th) it is very unlikely that you will lose your investment. Well, you assets might be devalued but if you hold your assets until the market improves, you can profit. Trading crypto can be risky, but if you made some losses in one trading, you might be able to recover the loss in another trading. You can also use your crypto assets for staking, yield farming, etc. to generate profits or minimize your risk. I have not tried this, but when the market starts going down, you can convert to a stable coin to minimize the risk.

Never Invest Crypto in Pyramid Scheme or HYIP

The only way to avoid crypto investment scams is to never invest on any platform where you are required to deposit crypto so that you can receive compounding profits. Never invest on any platform where you have to invest crypto and are offered a fixed return. Never be greedy believing that you can actually double your crypto in 30 days. Instead of using an investment platform, you can use your crypto to earn profits from centralized exchanges. For instance, if you have cryptos and if you use Binance, you can use staking or yield farming to earn profits. Since Binance is a legit platform, you will receive guaranteed profits. For instance, if you have shib tokens, you can stake shib on Binance and you will receive 10 percent APY for the locking period of 120 days. If you are using Coinbase, you can stake ETH 2.0 and earn 5 percent yearly interest. Exodus also offers to stake. You can stake ADA and a couple of other currencies on Exodus. These platforms are better than investment plans because your principal return is guaranteed, staking rewards are also guaranteed. I don't see a need to use a platform like Hyperfund and the likes.

Insuring Your Assets

You can insure your bitcoins on decentralized insurance platforms like Nexus Mutual or Etherisc. The insurance works as coverage for the assets that you lend through the cryptocurrency money market. I know all the technicalities associated with cryptocurrency insurance, not just Bitcoin but I have not tried it for myself.

Use Cold Wallet

Hot wallets are for those who use cryptocurrencies to make transactions, whether in the form of buying and selling something, or trading. Cold wallets are for those who like to invest in cryptocurrency and hold cryptocurrency for the long term. Cold wallets are safe if you worry about wallet hacking.

First published on Trendri, in author's name

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