Because smart investors understand the risks involved.

It’s important to understand that crypto asset investing has risks. There is no guarantee that any investment will be successful. In fact, there’s a non-zero chance an asset or project you invest in could fail, or the value might drop below the price you bought it at.


What are the risks in crypto investing?

Okay, so if you’re watching this, you probably want to be a crypto investor? Great! But wait! We want you to do it in a safe and responsible way. 

It’s important to understand that crypto investing is risky and crypto trading is very risky.

So if you’re just beginning your journey into crypto investing, understanding the risks involved and how to best protect yourself against these risks is one of the most important things you can do.

Now before we talk about the risks, If there’s one thing you take away from this video, it is the importance of being responsible for your own financial decisions.

In crypto there’s a saying called DYOR. That means Do Your Own Research. 

Which is another way of saying – don’t go blindly investing in something based on what someone on the Internet said. Including me! It’s important to research a variety of sources and form your own opinion. Remember - nobody can tell you if you should invest in crypto. That’s up to you. We can’t give you financial advice!

So with that said - what are some of the risks?

Firstly, protecting your capital is key to any investing strategy and it’s even more important in crypto because the market is prone to extreme price swings.

If you’re just starting out, a sensible approach is to only invest money that you wouldn’t miss or are prepared to lose if something goes wrong. That might be $100 or $1000. It’s different for everyone, but it’s not a good idea to invest all of your money or take out a loan to invest in crypto!

Secondly, you’ve probably heard that the crypto market is volatile, which means prices can go up quickly and go down quickly. They can! In 2017, Bitcoin started the year at $1000 and finished the year at nearly $20,000! That’s a 2017 return on investment of 1600%

Then in 2018 Bitcoin crashed all the way back to $5,800. That’s a 68% drop from the all-time high.

Now that’s volatile! In crypto extreme run ups in price and then extreme crashes are common. This can be very stressful if you have too much money invested. If you’re not prepared for that volatility, you’re not ready to invest in crypto.

Thirdly, it’s important to understand that crypto asset investing is speculative. There is no guarantee that any investment will be successful. In fact, there’s every chance that an asset or project you invest in could fail, or the value might drop below the price you bought it at.

Next, there are existential risks such as:

  • blockchain technology is still new and unproven at scale
  • Governments could crack down on crypto with lots of regulations
  • you could get hacked or an exchange that holds your crypto could get hacked…
  • and finally, you should know that crypto is full of some of the smartest scammers in the world who do nothing but sit around dreaming up sophisticated ways to scams noobs out of their crypto

All of these scenarios are possible 

But we’re not trying to scare you, we just want you to be a smart investor and be aware of the risks.

If you do decide to invest, think about your timeframe. If you believe in the market you might invest in one or two of the bigger cryptos like Bitcoin and hold them for a few years. Then you won’t be so affected by short term price changes.

If you want to be a crypto trader, start slowly. You will make mistakes so if you must trade, learn with small amounts and don’t go all in. You want to buy at support and sell at resistance, if you don’t know what that means, you shouldn’t be a trader!

We’ll learn more about different investment strategies in future videos.

Finally, please understand that you and only you are responsible for your financial decisions. Any content posted by Dacxi should not be considered financial advice or a recommendation to buy crypto assets. Before investing in crypto we recommend getting professional financial advice from a registered financial adviser. Only a professional financial adviser can tell you if crypto investing is right for you.