Volatility is a bitch, which is especially true for the crypto market. Unregulated and unguarded, it swings back and forth, making investors panic and walk away with nothing. But it doesn’t have to be this way.
After all, why not protect your money while simultaneously deriving a better performance out of a risky environment?
Well, fortunately, a performance-driven risk-adjusted strategy is here to help. In fact, it is essential if you are a serious long-term holder, and here is why.
Crypto market is a wild west and has been like that for as long as it existed. It’s a place where circumstances and crowd behavior set the rules of the game.
While that sounds bad, market changes create earning opportunities that you can’t find anywhere else.
But here’s an ugly truth – the higher the risk, the higher the loss rate. Here’s a historical example – if you purchased the assets in 1929 at the peak just before the crash, you would have suffered such a big loss it would have taken you at least 20 years to recover the money.
At that time people didn’t have the fancy algorithms and appropriate risk management strategies that could have limited the exposure, hence the result.
But 2022 is a different world.
We have technology that helps us earn returns and control our finances. Yet, so many still prefer the old-fashioned way of just buying & holding it’s surprising why financial wreck still has the “wow” effect.
For that exact reason, performance-driven risk adjustment matters more than ever before. But if you stick with a conventional approach to investing beware of these crypto market risks.
The crypto market remains a highly volatile and risky endeavor.
Over the past three years, the volatility has increased dramatically due to the great influx of new retail crypto users. We witnessed the consequences in May 2021, when newbies were panic-selling and taking the entire market down.
On the other hand, in Q1 2021, big banks started to show signs of interest in crypto, treating it like stock and using the conventional investing practice – prioritizing lower gains over higher returns.
As a result, you face a combination of power imbalance and irrational behavior, which does no favors. The market is no longer easy to predict. You can’t plan ahead and have to always be in control of your investment.
Today you win but tomorrow you lose. You can hardly find a person who will feel good about the uncontrollable swings. There’s nothing much we can do to change the market’s behavior, but what we can do is extract value out of this chaos.
With a performance-driven risk adjustment strategy, you can get stable returns while cutting risk.
For example, over the period of 23 months, Libertify’s Conservative risk profile delivered a +41.8% return while buy & holders lost -29.3% of their portfolio value. Plus risk (volatility) was reduce by 50% from 74% to 44%.
Regulation is non-existent, which is why the crypto market is prowled by whales, guys with big bucks who manipulate the market and shake weak hands off for personal gains.
They look for trends and analyze market conditions before attacking.
The only way to protect yourself from these deadly predators is to get out when it’s not too late or get in too early.
That’s one of the reasons why a performance-driven risk adjustment strategy is essential to cut such risks to a bare minimum.
That one is specifically true for Buy and Hold investors.
They often think of themselves as disciplined and invincible, thus suffering from optimism bias. Think about it – can you withstand volatility, big banks, whales, and uncertainty? The overwhelming majority certainly can’t.
After all, media, family, and friends can bombard you with negativity to the point when your optimism changes into pessimism and deep revaluation of all investment decisions.
The high pressure can trick your brain into panic-selling at a loss.
In a nutshell, Risk adjustment is a strategy that lets you extract value out of volatility by minimizing risks to deliver stable returns over a long period of time. Performance-driven risk-adjusted investing can be manual or automated, the choice is yours.
The risk adjustment strategy aims to let you avoid volatility, whales, banks, and uncertainty.
It ensures you are not making emotional decisions or getting played by big players and works in a similar fashion to a VIP bank manager who understands your risk tolerance and investment objectives.
However, everyone is different. Hence risk tolerance varies. Unfortunately, many aspiring investors follow the crowd, a common mistake.
At Libertify, we are first trying to understand what you are looking for long-term. Maybe you want to earn to retire or invest to make it big.
You might be a risk taker or risk averse, striving for 10x gains or 10% annually. These behavioral traits point to how best it is for you to approach a crypto market.
Eventually, once we learn enough about your interests, we offer a tailored performance-driven risk adjustment strategy that lets you earn at your desired pace. It’s like buying a brand-new electric car packed with the latest technology.
It delivers you where you need to be but automatically slows you down to avoid road bumps. You can of course take a risk and just ride through the obstacles, but will you really end up where you want to be?