Crypto markets can be very volatile therefore arriving at profits or losses very quickly and investors should be ready for this.
Threats to owning cryptocurrencies include security hazards and advanced attacks that compromise oneâs assets.
High-growth crypto investments are high-risk because of regulatory risks, and the possibility of market manipulation.
The cryptocurrency market continues to captivate investors with promises of astronomical returns. However, those eyeing potential 1000x gains in 2024 should know five critical risks that could derail their ambitions. While these risks are not unique to high-growth crypto assets, they are particularly pronounced in this volatile sector.
High Volatility
Cryptocurrency prices are also extremely volatile as is evidenced by this table showing the major cryptocurrencies. Such changes can occur within the shortest possible time and more often, the changes occur suddenly thereby eradicating a potentially large portion of an investment within a blink of an eye. While such an activity bears the potential to generate hugely generous returns it is also equally exposed to humongous losses. Investors should expect changes in the prices of these assets to be volatile and to fluctuate sharply.
Security Risks
Cryptocurrency space has been prone to hack attacks and frauds. These hackers have particularly been so charming by attacking exchanges wallets, and even smart contracts. These attacks have led to destructions of equal value in Millions of dollars in different virtual commodities. This is why investors need to be cautious and put in place measures necessary to safeguard their stocks from these unequaled risks.
Lack of Historical Record
Most cryptocurrencies that claim high returns have little track records. The lack of historical data also means that one can evaluate their sustainability and opportunities for development only today. If that is not accompanied by demonstrable performance, investors are flying blind, speculating as to what the result may be.
Regulatory Risks
Todayâs jurisdictions are still inconclusive when it comes to the regulation of novel cryptocurrencies. Numerous countries are struggling to categorize and configure what to do with these forms of electronic property. Fluctuations in the legal reforms on policies could significantly affect the value and compliance of given cryptocurrencies. Investors have to always be aware of changing legal rules that may apply to their investments.
Market Manipulation
The market for cryptocurrencies is still small and little regulated. Large buyers, known as whales, affect a given cryptocurrencyâs prices via their conspicuous purchase or sale spree. The above manipulation leads to the development of false trends which may have no real correlation to the value and even future increases in potentials.
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