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What are the disadvantages of cryptocurrencies?


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Disadvantages of Cryptocurrency Investing High Volatility: Cryptocurrency markets are highly volatile, which means prices can fluctuate quickly and unpredictably. Investors who are not prepared for market volatility could suffer significant losses as a result. Lack of regulation: Cryptocurrencies operate outside of traditional financial markets, which means there is little regulation regulating their use.

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1 hour ago, Qmiax said:

Disadvantages of Cryptocurrency Investing High Volatility: Cryptocurrency markets are highly volatile, which means prices can fluctuate quickly and unpredictably. Investors who are not prepared for market volatility could suffer significant losses as a result. Lack of regulation: Cryptocurrencies operate outside of traditional financial markets, which means there is little regulation regulating their use.

As cryptocurrencies continue to gain attention, traders have begun finding ways of protecting their bitcoin holdings from risk. Find out how to hedge bitcoin risk – including three cryptocurrency hedging strategies.

How to Short Crypto | IG International

What are the risks of trading cryptocurrencies?

There are a variety of reasons that cryptocurrencies, such as bitcoin (BTC), are considered risky. These include:

  • Lack of regulation. As cryptocurrencies are decentralised, banks and governments have yet to understand how best to protect traders and investors who choose to buy and sell the assets. The decentralised nature of bitcoin has thrilled its supporters, but it could create legal and taxation issues as it grows in popularity
  • Susceptibility to hacking. A considerable number of cryptocurrencies are stolen from digital wallets every year. In 2018 alone, it is estimated that $1.7 billion worth of cryptos were stolen and there is rarely a way to retrieve these losses
  • Reliance on technology. Bitcoin and other cryptos are completely digital assets, which means that they are essentially worthless without access to technological resources. With gold, real estate or even shares, you are gaining ownership over something that can be exchanged, whereas cryptocurrencies have no collateral backing them up
  • Market volatility. Cryptocurrencies are notoriously volatile, both in intraday trading and over longer periods. For example, bitcoin’s price experienced a sharp spike in December 2017, reaching a high of $19,763.50, before falling to a low of $3126.29 in December of the following year

However, for those keen enough to learn, there are ways to reduce the risk you take on, at least to a known amount. This is where risk management tools, such as stop-losses, and strategies, such as hedging come in.

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    • I have not been a fan of either of exchanges and wallets native tokens but would wanna explore it now. I took interest from the current hype around BNB, OKB and BGB. These tokens particularly BNB and BGB has shown strength which is obviously due to increase in demand to take part in the most of the launchpool. BNB rose almost 80% in the past 1 year, BGB was on the spotlight with about 190% in a year. OKB may not be left out due to it's potential but has made any significant movement recently. Wallet tokens on the hand have also been doing well but may not be compared to Centralized exchanges imho; I have also monitored few wallet particularly trust wallet and C98 wallet. My best guess is we could be seeing the wallet tokens making impressive price action as we approach post halving due to increase in transactions and I wonder if any one here is considering the prospect BWB token for Bitget wallet. Launching pretty soon and airdrop participation in play. I would appreciate your speculative opinion on it potentials.
    • In the realm of cryptocurrency exchanges, playing by the rules isn’t just a suggestion—it’s a must for staying in the game. Most major centralized exchanges (CEXs) strive to adhere to these regulations, implementing measures to prevent money laundering and illicit activities. However, a recent controversy has emerged with BingX, a top CEX, defying US sanctions by allowing Iranian users full access to its platform. BingX facilitates Iranian Rial trading, directly violating US sanctions. They allow Iranian users to trade cryptocurrencies without KYC verification. This, along with offering peer-to-peer (P2P) transactions using Iranian fiat currency, further raises red flags. This incident is reminiscent of the past troubles faced by giants like Binance, who were caught facilitating transactions for sanctioned individuals, resulting in a $4.5 billion plea deal with US authorities in 2023. The question remains: will this defiance by BingX lead to its downfall? Regulatory bodies in the US, like the SEC or DOJ, might take action.However, the severity of the situation raises questions about the long-term viability of the exchange and whether it may face the prospect of closure or severe penalties for its actions. As governments grapple with the complexities of digital assets, CEXs that prioritize expansion over compliance will likely face increasing scrutiny and potential consequences.  
    • The exchange continues to offers it's  users significant opportunities through its ecosystem products like PoolX and Launchpool. By participating in these platforms, users can benefit from various services such as staking, liquidity mining, and accessing new project opportunities. PoolX enables users to stake their assets and earn rewards through flexible investment options. Launchpool provides users with the chance to participate in early-stage project offerings. Overall, engaging with Bitget ecosystem products can diversify investment portfolios and facilitate exposure to new and promising projects in the crypto space.
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