How to Survive the Volatility in the Crypto Market

Crypto traders can use different strategies to safely trade in unpredictable market conditions. Before diving into the details, keep in mind that this is not financial advice, and it's always a good idea to do extensive research before investing in any product or market. Here are five strategies crypto traders can employ to survive and thrive on volatility:

1. Risk diversification

Risk diversification is just as important in cryptocurrencies as it is in traditional markets. Crypto traders can reduce the impact of volatility by expanding their portfolios to include many digital assets, or by combining crypto with traditional assets such as stocks and commodities. Since traditional markets are less volatile, traders have less portfolio risk.

2. Comprehensive market analysis

Despite its young age, the crypto ecosystem offers a wide variety of commodity options that require deep research by investors to discover a viable investment. Investors and traders in this market often follow public opinion on social media sites such as TikTok and Twitter. While some of these calls are lucrative, most of them result in significant losses.

Crypto traders and investors can prevent such losses by conducting extensive market research. Coingecko and Coinmarketcap are two services that provide comprehensive encrypted data, allowing users to examine historical price activity, project fundamentals, token economics, and more. Industry reports from companies such as Messari and Glassnode can complement this information. As a result, they are better equipped to make research-based trade choices.

3. Social Crypto Trading

Social media has changed the way the world communicates as most conversations now take place online. As a result of this paradigm shift, traders' interactions with financial markets are also evolving. Social trading is a novel way of investing that allows traders to share information and ideas, shortening the learning curve for newbies, while encouraging experts to share their trading strategies.

Bingbon is an emerging crypto derivatives exchange with a social trading platform in the crypto world. The exchange allows seasoned crypto traders to share their trades in exchange for an 8% cut in returns for successful replication. Meanwhile, novice cryptocurrency traders can choose from a variety of experts and follow the one that best suits their trading style. Even better, merchants can automatically copy transactions or make adjustments based on new information. In volatile cryptocurrency markets, this type of trading can be beneficial.

4. Duty of care

Crypto traders and investors can avoid market volatility by conducting in-depth research on potential businesses. The potential value proposition of the project, token economics, its team, and market liquidity for scalpers and day traders are some of the areas they can focus on.

This helps avoid volatility traps, as some crypto projects have a reputation for cheating investors, often referred to as "pulling." Due diligence will help traders identify projects that appear to be scams, as most projects will have faceless teams, insufficient paperwork, poor liquidity, and unrealistic goals, all of which can be sweet words.

5. Non-custodial wallets and wallets

While the above methods help reduce volatility, crypto traders can increase their security by adopting non-custodial services. This is not about the volatility of crypto assets, but about the security of the ecosystem. Crypto users can use crypto services to store and sell their tokens without custody.

（Writer：Charles Ouko）