In 2020 we were not only hit with a pandemic but also the increasing popularity of BitIQ Auto-bot. There was an uproar about cryptocurrency. With new currencies coming out and new platforms for exchange being built. Now there are over more than a thousand cryptocurrencies available for trading. Several exchanges allow you to trade cryptocurrencies. This opened up a new realm of investment opportunities. However, the majority of the investments are still made to bitcoin, the first cryptocurrency. Therefore, we have seen many individual investors taking interest in cryptocurrencies. Even though investing in crypto markets seems like the perfect way to turn high profits there are many drawbacks as well. As major investors like to point out about the risks associated in this crypto trading. Hence, if you are a new investor looking to invest in bitcoins but are apprehensive of the risks. Down below are some risks that will help you in making a choice.
High volatility
The first risk with any form of trading is the volatility of the markets. However, these are significantly increased in the crypto trading space. The crypto markets having a high volatility rate has multiple reasons behind. The main reason is that it mostly involves individual investors. Individual investors are known to be very fragile. Since they do not have a lot of capital backing them should the market crash individual investors increase the degree of volatility. They often sell and buy more than holding which causes heavy fluctuations in prices.
Is not backed by the government
Another major reason why there is a high risk in bitcoin trading is that it is not actual money. It is a digital currency that is not backed by the government. This makes it very inconvenient for you if you have all your major savings tied up in bitcoins. While more governments are adopting this form of currency there is still a long way to go when we consider digital currency. While many countries recognize them as legal assets, most do not recognize bitcoin at all. This is a little tricky to navigate and the individual investors sometimes find it hard.
Unregulated exchange platforms
Another high-risk factor in crypto trading is that you often have to rely on exchange platforms. As there is no such regulation, there are many scammers in world of crypto. It is also difficult to track scammers because of the decentralized system. While anonymity has its benefits, in such situations, it may become lethal. The decentralized system does not allow for the transaction to be traced back to the source and makes it difficult for the investors. Therefore, most use exchange platforms. With exchange platforms as well many claims to legitimate entities but end up running away with people’s money. Therefore, you as an investor should trust only notable websites. One such trading platform is the Bitcoin Era. It is a secure platform that offers you many great services.
Cyber theft
There would be a risk of possible cybertheft. We have to understand that cryptocurrency is a digital technology and this leaves it susceptible to hackers. We have heard incidents of people losing their bitcoin because of the scammers. Even though most people these days have started using e-wallets, there have still been several hacking reports. And, you cannot really retrieve the lost coins. In the case of a smart wallet, if you lose your key there is little to no chance of you retrieving the key. Therefore, you should be sure to do proper research and choose the most reliable wallet.
Still in the early stages
Even though it has been a while since bitcoin was introduced, they are still a fairly new technology. With dynamic changes happening over the last few years, it is difficult to predict how the markets may react. You may either end up losing all your savings or making enough profit so that you do not worry about retirement.
We advise to do some research and not just fall for the trend of investing. You should secure yourself should there be a fall in the markets and invest an amount that in the advent of a loss would not be detrimental to you.