3 Ways to Mitigate Crypto Volatility Risks

Jan 15, 2018

We’ll come right out and say it: Despite what skeptics are saying, cryptocurrencies will likely remain a lucrative investment choice through the foreseeable future. It’s up to you how you make the most out of their rich potential.

Sure, extreme volatility remains a cause for concern. The wild fluctuations popular crypto coins like bitcoin go through almost every day render them practically useless for day-to-day use. No wonder it is one of the biggest factors keeping many would-be investors on the fence!

But on the shinier side, there are ways to get around this problem if you are willing to try out new strategies. Here’re three such strategies that you can count on to mitigate the risk of crypto volatility to some extent:

#1 Stop orders: Not perfect, but better than having no protection at all

Stop orders are a lot less complicated than most investment guides make them sound. Almost all major exchanges offer this service to their regular customers. Basically, a stop-order tells the exchange to offer a pre-specified amount of digital currency for sale or buy if its price dips below a certain level.

Stop Orders typically come in two forms:

  • Stop-loss orders
  • Buy-stop orders

For example, if Jane purchases bitcoin worth $1,000 and wants to make sure she doesn’t lose more than $250 on the purchase, she could place a stop-loss order of ($1,000 — $250 =) $750. At any moment the market valuation of her bitcoin investment hits $750, the exchange would immediately try to sell it off.

A major issue with this strategy is that while it saves you from huge losses, you are not making any profit either.

Some exchanges also allow a buy-stop service. It works the same way as stop-loss orders, but instead of selling off your crypto stash, it will ask the exchange to buy more of it once the prices dip below a pre-specified value.

Buy-stop orders are based on the assumption that the prices will jump back shortly afterward, giving the investor a chance to land a bargain. After all, volatility creates as many opportunities as it causes losses.

#2 NuBits: Convert volatile digital currencies to a fiat-equivalent

A common way to hedge the volatility of a digital currency is to convert it to your current fiat currency regardless of its current market rates. By doing so, you will no longer have to speculate on the movement of your investment. Your money will be safe in your exchange wallet, which you can use to buy more crypto coins at any point in the future.

As you can see, this indeed is a risk-aversive technique that protects you from huge losses. But at the same time, you might not enjoy jumping in and out of “crypto” too often. For one thing, the commission you need to pay for crypto-to-fiat conversions (and vice-versa) is often too high. On top of that, the process itself can be complicated depending on where you live and what exchange you are using.

One way to avoid these complications is to convert your volatile digital currency to NuBits.

For the uninitiated, NuBits is a crypto coin which is always worth the value of $1 USD.

Because it is a crypto-to-crypto conversion, you no longer have to worry about going back and forth between crypto and fiat while simultaneously retaining the safety provided by fiat’s stability.

Beware though — useful as it is, NuBits is not immune from counterparty risks. Moreover, it has a questionable structure that, according to some experts, may eventually collapse.

#3 The Amon Card: Easiest way to navigate crypto volatility

Wouldn’t it be great if you had the freedom to use your bitcoin, litecoin, or ethereum stash to make payments anytime, anywhere — maybe even at your neighborhood store? Unfortunately, crypto volatility is among the biggest stumbling block preventing you from using cryptocurrencies for everyday purchases. Only if there was a way to circumvent this complication!

Well, guess what — there’s one solution and it’s called Amon!

If this is the first time you’re hearing about us, Amon is a multi-cryptocurrency debit card that aims to bridge the gap between virtual and fiat currencies.

Powered by a sophisticated home-grown AI system, Amon is the world’s first ever intelligent card. Not only does it allow real-time conversion of crypto coins to a fiat currency of your choice, but it also uses the computing prowess of its native AI system to fight volatility.

Amon calculates the returns of all crypto coins in the user’s portfolio and zeroes in on the one that promises the highest return. All these calculations are taken care of within the metaphoric blink of an eye.

Among other things, this helps you get rid of the pesky task of having to keep a tab on market fluctuations every time you want to authorize a conversion.

So, as you can see, there are various ways to mitigate or reduce the risks from crypto volatility. However, when it comes to removing volatility while simultaneously making your crypto investments available for everyday use, Amon is the platform you want to trust.