Investing in Crypto? 5 Ways to Prepare Yourself for Future Regulation

With cryptocurrency so extremely volatile, what should investors be doing to manage their risk?

The popularity of the crypto market is constantly growing. 2021 was an excellent year for Crypto. And while the era-defining events pushed the assets towards a euphoric territory, the start of 2022 was anything but ecstatic. Cryptocurrency regulations are nightmares for investors but the secret is that more regulation could increase market stability and the price and value of crypto, so investors can look at it with healthy optimism. With cryptocurrency so extremely volatile, what should investors be doing to manage their risk?

Stay calm

Whether you decide to sell your cryptocurrency or see a dip as an opportunity to buy more, you need to act with a cool head. Making emotional decisions, especially when trading, rarely results in anything good happening. So before you rush into the market in a panic, you'll want to reflect on why you're trading crypto in the first place.

Technical analysis

You can expect erratic market movements in 2022. And that's not a prediction but common sense. Doing your research in regards to technical analysis can help you predict the massive market movements better than others. And as it's undervalued as a tool, technical dexterity can come across as a game-changer for the investor in you.

Keep Records

A crypto portfolio tracker can do the work for you and help ensure accuracy in your record-keeping. This can be particularly helpful for more active traders. A tracker is a third-party tool you can sync with your wallets that will pull your data and show your gains, losses, and other factors about your activity and holdings. Some will monitor price changes, autofill tax forms, or offer negative balance warnings.

Diversify your crypto portfolio

It doesn't pay to have too much invested in one single cryptocurrency. Or as they say: don't put all your eggs in one basket. As with stocks and shares, spread your money out among different digital currencies. This means you don't risk being over-exposed should one of them plummet in value – especially as the market prices of these investments are highly volatile.

Be aware of upcoming regulation

Throughout the past year, there's been a heightened focus on cryptocurrency regulation. Though it's impossible to predict what will be instated, it's good to be aware of what's being discussed by lawmakers.

Disclaimer: The information posted in the article is for educational purposes only. By using this, you agree that the information does not constitute any investment or financial advice. Do conduct your own research and reach out to financial advisors before making any investment decisions.