Crypto investment is entertaining, unpredictable, and high-speed. The bigger reason behind its attraction to millions is the high return. Some people don't even know what is risk and reward ratio is, and without doing the calculation, they just dive into it. Also, there is no research and no diversification, which is why it is necessary to gain knowledge. Weighing crypto risk vs reward in the crypto field is important, so let's talk more about it.
First, we have to check the reward side; there is a potential for growth in Bitcoin, Ethereum, and other smaller coins, which are called altcoins. You can see that people who invested early in Bitcoin, Ethereum, and altcoins have gotten massive returns. In some cases, we can't even calculate the return because it was that huge. It is attracting the institutional investors along with the retailers, why? because of the technology. Crypto is not just a money-making machine, but there is technology behind the crypto that is attracting many big eyes. BlackRock is a big example of it. New ways of earning are emerging, such as Defi, NFT, blockchain gaming, web3, and more. Day by day, Crypto is getting bigger
Reward is there, but risk is also involved in it because the crypto market is known for its high volatility. Price moves wildly within hours, and even a single news or tweet from a big influencer can make the price jump or dump. This is not like the stock and forex markets because sometimes technical analysis fails to evaluate the situation. Many experts believe that crypto research should be more based on fundamentals rather than technicals.
There is regulatory uncertainty, which we have talked about in our past articles. A policy change can make a big difference, and the best example of it is China. China has banned crypto completely. It is illegal to use crypto in China, which means you can go to jail if you get caught using cryptocurrency. Sometimes investors lose billions in scams and hacks, and this is a security threat; however, if you keep your keys safe, then you have no risk. Crypto is all about risk is yours and reward is yours because there is no middleman, and you have to save yourself from these scammers and hackers. You have to save your keys.
I am not saying that if you are a beginner, then you have to avoid crypto. Read my lines carefully, let's say you are a beginner, so you should start with a small investment, and also stay away from highly volatile coins. And focus more on diversification. There is a famous quote
"Don't put all your eggs in one basket."
Whether it is crypto or another field, Deep research is very important. You can be trapped with a scam coin, so be careful and always do your homework. Please stay safe, and I want you to share this post on social media. Make a meaningful comment that is well-written and of good quality. I am doing I hope you are doing well too. Looking forward to seeing your support for me. Thank U.
