The year 2022 has already become one of the most frightening y | 9RD Analytics
The year 2022 has already become one of the most frightening years for many investors and traders. The rate at which the giants of the crypto industry are falling is staggering. After Terra's fall, we thought the market had cleared the trash and would be better now. After the bankruptcy of 3Arrow Capital, we thought the market was definitely at the bottom and we would soon see a bullrun. And then FTX went bankrupt.
Many people will be disappointed in cryptocurrencies and will leave after losing money. But the strong and tenacious will stay.
But those who stay must learn important lessons.
1. There is nothing reliable about crypto. One week ago FTX or Alameda participation as an investor in a new project was a 100% guarantee that the project had a bright future. Then it turned out they had liquidity problems and Alameda Research was run by a person (Caroline Ellison) who didn't know what he was doing.
The conclusion is that any market participant - an investment fund, an exchange, a DeFi project, etc. - can go bankrupt at any time. And this is largely due to the fact that there is no in the public domain about the financial condition of such companies.
2. Crypto market is a fishbowl where every fish wants to swallow as much as it can. It's every man for himself. No one will help you but yourself.
3. Everyone has to take care of himself or herself. What does it mean to take care of yourself? You have to constantly improve your level of knowledge. If you are involved in trading or long-term investing - learn. Don't rely on other people's opinions. If you listen to other people's advice, you have to understand the logic of that person. Why does he have that particular opinion and how can it be explained? And for that you need knowledge.
4. You have to look soberly at events and opportunities, not to give in to emotions, especially to avoid feelings of greed and not to fall into euphoria in the case of success. Success in crypto largely depends on psychology.
5. Diversification is very important! And Risk Management!
Do not invest all your money in one asset. Optimal is 2-3% in one asset. 5% - if you are very confident in the reliability of the asset.
Distribute assets by type: stabelcoins, protective assets like bitcoin and ether, risky assets. Diversify each of them as well. For example, don't keep everything in one stabelcoin. Split between USDT, USDC and DAI.
Keep the bulk of your crypto assets in a cold wallet. It is better to keep only those funds on exchanges that you plan to trade in the near future. Don't keep all of your money on one exchange, you already figured that out :) The money on CEX does not belong to you, but to the exchange. For swap trading you can use DEX.
In general, you understand the principle. The most important thing - you can not trust anyone, you must always act carefully. And then over a long period of time success is possible.
Now we are more experienced, and this is the most important thing.
#riskmanagement
