Cryptocurrency volatility should be treated like any financial market turbulence, and many investors will successfully take advantage of it, affirms the CEO of one of the world’s largest independent financial services organisations.
Nigel Green, founder and CEO of deVere Group, is commenting ahead of a predicted forthcoming slump in the value of Bitcoin, the world’s largest cryptocurrency by market capitalisation.
The forecast has been triggered by Mt Gox, a defunct exchange, transferring 16,000 tokens.
Mr Green, whose firm launched deVere Crypto, a pioneering cryptocurrency exchange app in early 2018, comments: “This is the first time in three months that Mt Gox has moved any of its assets. The last time it sold-off funds, a price shock ensued as the supply of the currency in the market increased.
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“Understandably, this is all generating a lot of noise and reaction from many cryptocurrency enthusiasts and investors.”
He continues: “However, cryptocurrency volatility should be treated like any financial market turbulence.
“As with all types of investing, diversification is the investor’s best tool to mitigate potential risks and to take advantage of the opportunities that present themselves in volatile market conditions.
“Cryptocurrency investors should be diversified across the main digital tokens, such as Ethereum and Ripple, and as a part of a wider investment portfolio of assets, sectors and regions.”
He goes on to say: “Some of the world’s most astute investors have always used market volatility as major buying opportunities in traditional financial markets. By topping up their portfolios when prices are lower and/or taking advantage of lower entry points, they can often considerably strengthen their position. The crypto market is no different.”
Mr Green adds: “One tool that is widely overlooked and underused to avoid losses in the crypto market is the stop-loss mechanism, which is a type of order that limits potential losses when trading in the cryptocurrency market.
“Available on the deVere Crypto app, the simplest way of looking at the stop loss tool is like an insurance policy.”
The deVere CEO concludes: “Volatility does have inherent negative outcomes, but to believe all volatility is necessarily entirely negative is misguided.
“Volatility in the crypto market, as in all financial markets, is not all bad and can be capitalised on by investors for their long-term financial gain. Using it effectively can be a very powerful strategy.”