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Crypto Winter: Pffft. Here’s How to Hold Out For Summer

Crypto Winter has hit. No crypto investor is shielded from temporary wild price movements, but minimizing the losses pays out in the end, says Mathieu Hardy, Chief Development Officer at OSOM.

Nobody likes to lose money, but temporary losses are just an inevitable part of investing. This is especially true if you have decided to invest in crypto. However, even during the coldest crypto winters, there are ways to hold out for summer.

Cryptocurrencies are arguably some of the most rewarding and volatile assets available to invest in today. The upshot of that volatility is that these assets can be highly lucrative; however, if you don’t know what you are doing, this presumption can fall flat.

Unsurprisingly, the sharp and prolonged dips often witnessed in the crypto markets result in losses for many investors. This is especially true for those who buy the top and sell the bottom or invest money they otherwise needed and are forced to sell at the worst possible times. Temporary losses due to “price-discovery” and “black swan” events are essentially inescapable. But they can be significantly limited and mitigated by utilizing appropriate risk management measures.

Tools of the trade – Math

“Managing risks” is the golden rule for any investor or trader. The number one objective is “stay alive.” In other words, avoid your portfolio going to zero. The best way to do this is to statistically compare the risk you are taking versus the reward you expect.

The best way to manage risk is to diversify. 

Modern Portfolio Theory (MPT) dictates that you shouldn’t put all your eggs in one basket. In other words, investors should not single-mindedly focus on one particular asset but instead spread their investments between a few of them. Not only does diversification reduce risk, but it can even do so without diminishing returns. 

It’s even intuitively easy
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