Risk management

Greetings CryptoCubers 

We hope you had an amazing week and got some exploration done. After yet another week of awesome crypto action, there is some great info right up ahead. 

Price roundup

BTC - $61 033

ETH - $2922

SOL - $145.28 

Last week we covered a bit about whitepapers, namely, how to differentiate between a great and terrible project. Remember to read and consider before investing in a project that is not so well known. Even with bigger projects, it's always good to research before diving in.

Topic of the week:

Let's talk a little about Risk

Risk is a crucial part of investing, and managing your risk is a skill one can develop through experience. Many people read about crypto and all the exciting projects but their fear of losing is too high and they never invest. 

So, what is risk management? 

In short, it is learning how much capital one is willing to risk to obtain a reward. In many investing scenarios, there is an aspect of risk involved, for example, someone buying property must risk a large sum of money to purchase land, however the reward of rental income is worth them taking such a risk. There are other risks involved such as not getting a tenant, investing in the wrong area, or perhaps the country they invested in is experiencing economic downturn, which will be followed by falling property prices.

In Crypto there are risks and rewards, however there are some projects with extremely high risk and others with lower risk. The general saying goes “High Risk High Reward, Low risk low Reward” 

Some people enjoy taking high risk and placing large amounts of capital into “memecoins” while others play safe and buy the larger market cap coins like BTC and ETH.

We call high risk investments “moonshots”, specifically referring to people who invest with the hope of gaining 1000x their original investment. While this does happen and we see people turning $100 into $100 000 and sometimes even more, it is a rather rare occurrence and very similar to gambling, with the “house” or the coins creators always winning. This is why Crypto Twitter is filled with many people Shilling (promoting) a project they have invested in with the hopes of making these 100-1000x gains by bringing more people into the project. 

These scenarios are rare and require insider information to predict such an outcome. 

Crypto Whales

In crypto there are “whales” who are the largest investors, placing millions of dollars into projects. Smaller investors like track the whales' movements to try and follow their lead. Since all wallets have an address it is possible to track their movements on the blockchain but it is difficult to pinpoint exactly who the whale is. There are many X accounts that are dedicated to watching and following whales, however, just because they are whales does not mean they cannot lose, so be cautious when following whale movement. 

Then we have the larger projects such as Bitcoin and Ethereum, which have solidified themselves in the space and are generally safer with lower risk than other altcoins, memecoins, and unknown projects. While there is still volatility, it is not in the realm of 100-1000x overnight. It's always easier to start with smaller amounts and monitor the progress yourself. As we always emphasize, DYOR(do your own research) before investing and never invest more than you’re willing to lose.

Crypto Investing requires patience and persistence, be patient with your investment, and don't get rattled by the volatility.There are many great investments out there that can go 10-100x but this happens over months and even years, and when you win there is no harm in taking the profit and starting over. New projects emerge every day if you missed one there will be another.

We hope this was an insightful newsletter, we are here to help however we can! Feel free to reach out and we’ll get back to you as soon as possible.

Stay tuned for more!! This is just the beginning!  

Safe Investing 

CyptoCube