The common phrase or idiom "no pain, no gain" can be associated with any sort of struggle, difficulty, or challenge. When it comes to investing and trading cryptocurrencies like Bitcoin, Ethereum, Ripple, or more, the higher level of risk associated with these assets means they also carry a far higher level of reward via upside potential. These young emerging technologies have the potential to change the world and become the future of money, replacing paper currencies that have been in use by civilizations for thousands of years.
But the risk associated with crypto assets can be greatly minimized through a number of carefully thought out strategies, and by taking positions in uncorrelated or anti-correlated assets as a hedge to one’s overall crypto portfolio holdings. This guide will walk you through some of the safest strategies to protect your Bitcoin holdings and de-risk your crypto-focused portfolio.
Altcoins like Ethereum, Ripple, EOS, and Litecoin have a unique relationship with Bitcoin. Oftentimes, both of their prices move in tandem, showing a tight correlation between them. Other times, they move completely opposite one another.
Throughout much of 2019, the relationship between Bitcoin and altcoins has been anti-correlated, with altcoins failing to rise alongside Bitcoin. The divergence between the assets can be seen through BTC dominance charts – a metric used to determine Bitcoin’s value in comparison to the rest of the crypto market.
However, this is not the norm, and altcoins can provide a profitable substitute during times when Bitcoin is consolidating around support or resistance. Cryptocurrencies have shown explosive growth in the past, and are still a very young technology with much untapped potential.
To ensure the investor doesn’t miss out on other future opportunities in the crypto market, a portfolio that includes Bitcoin and a variety of altcoins from the top ten cryptocurrencies by market cap should be considered and can be extremely successful. Investors should always perform due diligence and research before selecting any altcoins and seek out tokens that have real-world use cases and utility to derive their value from. These utility tokens can protect an investor from Bitcoin price failing, as the utility these tokens provide would in turn continue to provide value.
Just as altcoins can often show anti-correlated price movements in comparison to Bitcoin, many other markets are simply so far disconnected from Bitcoin and the categories each market touches such as the financial or technology sector, that they move entirely anti-correlated or uncorrelated to Bitcoin and make for a great choice as a hedge for crypto holdings.
For example, many commodities such as oil or natural gas that have been traded for ages will show completely uncorrelated price movements.
Gold has recently shown some correlation with Bitcoin in 2019 as both assets began the early stages of a new bull run, but they’ve since diverged again with Bitcoin falling and gold continuing to rise.
In recent weeks, many stocks and indices have also demonstrated price movements opposite of Bitcoin, suggesting that there are opportunities to de-risk a Bitcoin or crypto heavy portfolio at every turn.
Tech stocks are among the best possible ways to gain exposure to steadily performing assets. The technology adoption lifecycle keeps new technologies growing at an exponential rate as the technology’s userbase and network grows. This has proven to be effective for investors who are betting on the overall global technological revolution.
One way to gain exposure to these markets, is by opening long positions on stock indices such as the S&P 500 or UK100 while also holding Bitcoin as collateral. This well-rounded investment strategy is offered by platforms such as PrimeXBT, a Bitcoin-based margin trading platform that offers cryptocurrencies, forex, stock indices, commodities and more at up to 500x leverage. By holding Bitcoin on PrimeXBT and using it to gain exposure to a variety of additional markets including stock indices, investors can build a safe, diverse, and strong-performing investment portfolio.
Bitcoin and crypto performance is often tied to times when there is economic certainty. If the economy is doing well, investors and traders have a higher appetite for risk-carrying assets like emerging markets, crypto assets, and even the stock market.
However, during economic turmoil, or if there are fears over a coming recession, investors often de-risk their higher-risk assets, and move into safe haven assets that have regularly shown stability.
Gold is often lauded for not only its stability but its performance during times of economic distress. Gold has been used throughout the ages as a form of currency and tool for trading, and due to its longevity investors and traders turn to it as fears rise.
Similarly, forex currencies such as the Japanese yen and Swiss franc are often considered “safe haven” assets during global economic downtrends. These countries have a strict economic policy and steady growth that helps their native fiat currencies stay relatively stable. Investors and traders know this, and often use these forex currencies to reduce overall risk in their trading portfolios.
Traditional assets often serve as the best hedge against non-traditional assets like digital currencies, and high-risk pot stocks or other emerging markets.
Most Bitcoin investors and traders are in Bitcoin for the long-term. While Bitcoin can be extremely profitable trading its short term movements, most believe that eventually, Bitcoin could reach valuations of $100,000 or more per BTC due to the inherent scarcity hard-coded into Bitcoin’s protocol.
If an investor or trader has a large amount – or any amount – of long-term Bitcoin holdings, it would be wise to open a short position whenever Bitcoin price meets strong resistance, or as Bitcoin’s rally starts to correct.
The thought process behind this strategy is that if Bitcoin value is dropping, traders can offset any losses accrued by hedging with a short position. The short-term short position in BTC will generate profit as the long-term position drops in value.
One of the most overlooked ways Bitcoin holders can protect their assets and portfolio is by choosing a platform with many layers of bank-grade security. Any trading platform must include address whitelisting, to ensure only verified addresses can be sent Bitcoin. Two-factor authentication is also a necessary inclusion, as cyber criminal’s methods have only advanced as crypto technology grows.
The Bitcoin and crypto market is incredibly lucrative for investors and traders with a high appetite for risk. However, these same investors and traders do not need to expose themselves risk unnecessarily, and can even take steps to mitigate any risk in holding crypto asset by diversifying across multiple assets, taking out short or long hedge positions, and by ensuring the platform of choice offers all of this plus the necessary security measures to keep assets safe and secure.
Only one crypto platform stands out as the one-stop-shop for all of the key needs to achieve a low-risk portfolio comprised of Bitcoin, crypto and traditional assets, that also provides the tools traders need to capitalize on and profit from both rising and falling markets.
|#||Crypto||Prediction||Accuracy||CVIX||Price||24h||7d||Market Cap||Volume 24h|
|1||BTC||Bitcoin predictions||79.2%||41||$42 031.59||-3.48%||-2.59%||$791 393 954 252||$31 747 117 181|
|2||ETH||Ethereum predictions||70.4%||56||$2 918.83||-5.04%||-3.78%||$343 568 213 349||$17 440 054 934|
|3||USDT||Tether predictions||90.8%||1||$1.000459||-0.02%||0.01%||$68 574 589 302||$69 040 305 714|
|4||ADA||Cardano predictions||65.2%||70||$2.12||-3.86%||-2.03%||$67 842 308 406||$2 790 874 402|
|5||BNB||Binance Coin predictions||72.8%||59||$341.96||-1.79%||-7.48%||$57 495 736 706||$1 499 392 995|
|6||XRP||XRP predictions||74.4%||50||$0.930539||-2.70%||-0.96%||$43 472 608 125||$2 798 278 933|
|7||SOL||Solana predictions||67.6%||68||$134.46||-7.35%||-4.28%||$39 991 503 535||$2 559 971 396|
|8||USDC||USD Coin predictions||91.6%||1||$1.000432||0%||0.01%||$31 274 186 323||$3 304 747 454|
|9||DOT||Polkadot predictions||69.6%||68||$27.75||-3.90%||-5.26%||$27 404 751 396||$1 534 718 165|
|10||DOGE||Dogecoin predictions||71.2%||63||$0.200627||-1.87%||-6.10%||$26 377 191 591||$850 603 349|
|11||UNI||UniSwap predictions||67.6%||68||$24.35||1.57%||14.50%||$14 894 976 126||$1 220 639 004|
|12||AVAX||Avalanche predictions||58.8%||84||$66.26||-7.62%||2.41%||$14 596 076 840||$1 012 955 214|
|13||LUNA||Terra predictions||71.2%||60||$35.29||-4.09%||24.68%||$14 110 398 958||$1 562 373 257|
|14||BUSD||Binance USD predictions||95.2%||1||$1.000438||0.02%||-0.01%||$13 532 008 893||$4 826 393 143|
|15||LINK||Chainlink predictions||68%||70||$23.39||-2.95%||-1.74%||$10 644 298 254||$1 068 673 199|
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