By Max Power
May 17, 2022, 4:29 PM
The market shock caused by the abrupt and unexpected Luna crash has solidified the risk to which investors are exposed when they do not hedge their exposure. While the market crash was a single incident, it has demonstrated the importance of having access to hedges in dealing with uncertain market conditions.
The recent crash in the crypto market has highlighted the importance of risk management.
This is a reminder that investors need to hedge their bets, especially when the market is volatile.
Market-neutral funds offer investors the opportunity to profit from both bull and bear markets by investing in other assets that are uncorrelated with their main investment. This means that even if one asset falls in value, traders can still make money from the other assets they hold.
Market volatility also highlights how important algorithmic trading has become in recent years. Algorithmic traders use software programs to execute trades on their behalf automatically according to specific criteria set by the trader, who may be based anywhere in the world.
Many investors are now turning to algorithmic trading as a way of reducing their exposure to the volatility of cryptocurrency markets. This type of system offers investors some protection from market volatility.
Although the crashing of Luna had been incredibly disruptive, and many people are still feeling angry, it’s also had a positive impact on the crypto market. It is emerging as a dominant force in the industry, where a variety of people are able to trade without constraints. Although this is not something that most traders would normally be able to do, now they are able to trade safely within their risk capacity using the hedging mechanisms that market-neutral funds offer. Furthermore, with the ever-increasing popularity of crypto exchanges, traders are realizing that it’s possible for them to source altcoins from a wide array of providers. This provides them with more choice and greater tools for keeping track of their portfolios
Many investors have lost out—intelligently investing with algo-trading would have given them a chance of recovering much more than simply holding. However, for this to happen, we will need to accept and understand the guiding principles of crypto trading. We must choose strategies that offer a high potential for profit when both the bull and the bear are running hard. Algo-trading portfolios such as Lighthouse and similar services are expected to grow quickly as algo-trading becomes more profitable and popular.
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