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Cryptocurrency Risk Management as Volatility Continues

By 01/21/2018 No Comments

While managing your risk is the most critical part of your investment strategy in any market, Cryptocurrency risk management needs particular attention.

Here’s a quick review of the market in the past few days, and some tips on cryptocurrency risk management.

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Cryptocurrency Price Action

The top 20 largest cryptocurrencies by market cap erased some or all of Saturday’s gains on Sunday.

Ethereum has been unable to break above the key resistance and 23% Fibonacci retracement level of $1,148. It has been supported at approximately $1000 while remaining above the daily cloud of  Ichimoku Kinko Hyo.

ETHUSD Price Action - Cryptocurrency Risk Management

ETHUSD Price Action – Cryptocurrency Risk Management

The key support level for ETH/USD remains at 50% Fibonacci level of approximately $830. This can also be considered as a buy limit order entry.

The future cloud remains bullish while Ichimoku’s Tenkan line is just about to cross below the Kijun line.

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The Fibonacci and technical patterns have been similar for Bitcoin and Litecoin, while Ripple’s pattern has been slightly different.

Fundamentals

This new drop in price across the board came after Wall Street veteran Peter Boockvar predicted an epic 90% crash will hit the cryptocurrency market on CNBC.

He is certain that the cryptocurrency market is in a giant bubble. He said in an interview that “When something goes parabolic like this has, it typically ends up to where that parabola began.”

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While he can certainly be correct about the downfalls, we could also expect yet another rally in the crypto market which could follow the crash.

At the end of the day, all fundamental analysis for the cryptocurrency market has been on a speculation level.

Cryptocurrency Risk Management

We normally take the IDDA approach when analyzing assets, which means we look at the technicals as well as the fundamentals and market sentiment before creating an investment strategy based on our risk tolerance.

Unfortunately, when it comes to cryptocurrencies,  there are no fundamentals to talk about, other than a website with a message that promises to make capitalism better.

That is why the market noise and personal predictions on major news channels have a much bigger impact on the crypto-market than any other.

This, along-side with the manipulations by big players have created and ultra volatile price action. With this investment in cryptocurrencies demands a more precise risk management. The key is not to get excited when the markets rise and buy more once they drop. That is ONLY if you can afford to lose your invested money. Get my risk-management updates here.

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xoxo

Kiana

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