A market correction is a decline in the price of an asset by more than 10%. Though the dip can be fairly small, it usually indicates that the crypto had rallied far from its established trend. Learn how to trade during the correction.

As we’re nearing the end of the first quarter of 2025, US president Donald Trump’s administration has been in charge of the world’s largest economy for only about two months. But in this short period of time, the 47th POTUS has already been making an outsized impact on financial and crypto markets — as the threat of tariffs with many of America’s trading partners, government sector layoffs and a new paradigm in the relationship between the US and European economies have sent investor sentiment into the territory of fear. Both stock market sentiment indices and the major Bitcoin 

 indices are hovering between the orange and red zones of fear.

As of the time of this writing on Mar 17, 2025, the stock market’s primary gauge — the S&P 500 index — has declined by around 8% since its recent peak on Feb 19, 2025, while 

 (BTC) is down by 23% since its all-time high on Jan 20, 2025, the day of Donald Trump’s inauguration.

As the crypto market declines, investors are becoming more unsettled, wondering if this drop represents another blip on the typically mercurial radar of Bitcoin or a prelude to a steeper downturn. Is this the market correcting itself after recent (possibly overly) optimistic gains, or are we witnessing the start of something scarier? In this atmosphere, it's important to distinguish between a market correction and a more profound decline known as a 

. In this article, we cover what a crypto market correction is, how it differs from a bear market and — more importantly — how you can prepare for it as a cryptocurrency investor.

A correction is a market decline that typically ranges from 10% to 20%. It signifies a relatively small but still noticeable drop in asset prices. The crypto market undergoes more frequent corrections than the stock market, due to its inherently 

. Over the past year alone (to mid-March 2025), Bitcoin’s price has experienced at least six corrections. In comparison, the stock market's primary index — the S&P 500 — hasn't experienced a correction within the past year. However, it's quickly approaching just that, with prevalently negative investor sentiment a 9% decline from recent peaks.

Is a market correction the start of a bear market?

A market correction — especially if it leads to a rapid decrease in asset prices — might seem worrying at first, but it’s part of the market's natural rhythm. In most cases, corrections end with a market rebound, i.e., a bull market, as asset price drops lead to increased interest to 

. However, if a correction is caused by significant underlying issues — such as price bubbles that have built up over long periods, or wider economic declines — it can be a precursor to a 

, which is characterized by a significant drop of over 20% in the market as asset prices decrease.

 interchangeably. However, others distinguish between the two concepts. According to some definitions, a market crash is a significant but short-lived decline of over 20%, while a bear market is a prolonged period of depressed asset prices that may last for months, or even years.

It's important to distinguish between a crypto market correction and a bear market, as the two require different strategies and approaches. Market corrections generally don't require the type of drastic measures from investors that bear markets do. As we’ve noted above, some analysts refer only to prolonged crashes as bear markets, while others use the terms “crash” and “bear market” interchangeably. If we assume the latter definition, then any market crash of over 20% — whether short- or long-term — can be described as a bear market.

Note that the definitions of a correction (10% to 20% decline) and bear market (over 20% decline) originated in traditional finance. These definitions have been used for the crypto market as well, but due to its higher volatility, the crypto market experiences corrections and bear markets considerably more often than the stock market does.

We noted earlier that the last time the stock market experienced a correction — as measured by the S&P 500 — was between July and October 2023, around one and a half years ago. Even then, the decline in the index was contained to 10%, just meeting the definition of a correction. In contrast, the crypto market has experienced numerous corrections (and three crashes) over the past year alone, to Mar 17, 2025. The image below shows these three crashes, which resulted in the decline of the 

 by around 22–23% each time. Additionally, we’ve annotated the ongoing correction that started to develop on Mar 2, 2025 — just days after the market rebounded from its last crash. This correction has so far (in ten days) resulted in a 12% decline in the total market cap.

Evidently, the crypto market is much more accustomed to corrections and bear markets than the stock market is.

How to prepare for a crypto market correction

Crypto corrections often arrive after periods of overly optimistic buying. They may also be caused by negative sentiment when crypto gets hammered — once again — by another influential regulatory authority. Investor sentiment may also turn negative and lead to a correction when traditional markets are trending downward. The last scenario is what we’re witnessing right now — the new Trump administration’s penchant for tariffs and drastic changes to budgetary spending has sent stocks downward, and the cryptocurrency market has duly followed suit.

When a correction is on the horizon, what can you do to best protect yourself? Below, we list several strategies that can limit the impact of a crypto correction on your investments.

Consider reducing your long positions when you sense early signals of a market decline. Some 

 or oscillators turning downward, can help you identify a market peak and an imminent downtrend.

 is a preset instruction to sell an asset once its price drops to a specific level. It’s one of the best trading strategies to limit potential losses during a market slump. Stop-loss orders have two primary benefits. First, they free you from the necessity to monitor prices and continually close your positions manually. Secondly, and importantly, these orders help avoid emotional decision-making during volatile downturns.

Placing stop-loss orders is just the tip of the iceberg when automating your trades. You can also devise considerably more sophisticated automated trading strategies by using 

. Bybit offers a variety of these bots to help you set key parameters for your trading strategy and execute it in a fully automated fashion.

 lets you automate your grid trading — a strategy whereby a set of orders is placed at several points above and below a certain reference price for an asset. The price points above the current asset price are designated as sell orders, while those below the current price are reserved to trigger buy orders. The corresponding sell or buy order is executed when the asset's price reaches a pre-specified point in the grid.

Another useful trading bot for your correction arsenal is the 

DCA is one of the most valuable trading strategies when expecting a correction or finding yourself in the midst of one. It involves splitting your total planned investment amount into equal chunks that are invested at predetermined time intervals, e.g., monthly, fortnightly, weekly or even daily. You make your regular fixed investments regardless of how the market moves.

As with automated trading strategies, DCA helps remove the emotional aspect from your investing. When you anticipate a market downturn, emotional factors can easily creep into your decision-making. DCA is one key way to prevent your emotions from affecting your trades.

DCA also reduces the impact of market volatility, since you’re spreading your purchases over time instead of buying at a single price point.

The Bybit DCA Bot we mentioned above isn’t the only way to automate your DCA strategy — there’s also the 

 product, which lets you set up your regular DCA investments in a few easy steps.

In the event that a correction continues to develop into a crash, the most crucial step is to avoid being influenced by emotions. If you find yourself amid a market crash, remember that all crashes, just like all corrections, are followed by market rebounds. The bottom of the market isn’t going to fall off — profit-seekers, both retail and institutional investors, will sooner or later move in to buy the dip. In fact, this could be an excellent opportunity for you to acquire assets with strong fundamentals, and at bargain prices.

Thus, stay calm, plan for the long term when prices inevitably recover, stick to strategies that eliminate emotional trading — such as automated methods and DCA — and perhaps even consider buying high-potential assets while they remain undervalued during the crash.

The concept of market corrections sounds unnerving. But unlike protracted bear markets, they’re typically short-lived and followed by price increases. The key steps to take in a correction are to avoid emotional decision-making, reduce exposure as much as possible, place some stop-loss orders and employ strategies like DCA and automated grid trading.

Notably, while stock market investors aren't accustomed to frequent corrections and crashes, the crypto market experiences them every year, multiple times. And yet, the multiyear, long-term established trend of the market has remained upward ever since the word “cryptocurrency” entered the financial vernacular. A stock market investor might feel intimidated by a correction — and even feel like fainting at the thought of a crash — but a savvy crypto investor knows that corrections and crashes are business as usual. As such, be prepared, but don’t panic. We’ve been through crypto market crashes more often than Bitcoin has been declared dead.

Beginner

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Crypto market correction: What it means and how to prepare

Ethena Labs and Securitize have launched Converge, a settlement network designed to bridge traditional finance (TradFi) and DeFi.

Daily top performer — PancakeSwap (CAKE)

The S&P 500 gained 0.64% as softer retail sales fueled Fed rate cut speculation. Investors await Wednesday’s Fed decision. Gold hit a record $3,005 as geopolitical tensions and trade concerns fueled safe-haven demand, with strong support from central bank and ETF purchases. Markets await the Fed’s policy decision. The Coindesk Indices, which tracks the broader crypto market, fell by 0.60%, with Bitcoin and Ether up by 1.66% and 2.12% in the past 24 hours. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today’s top performer is CAKE, up 27.9% after PancakeSwap MEV Guard extends wallet support for improved trade security.

PancakeSwap (CAKE), launched in September 2020, is a BNB Chain-based DEX for BEP-20 token swaps, offering lower fees and faster transactions than Ethereum-based rivals. 

 now supports more wallets on BNB Chain, including Trust Wallet and Rabby Wallet, enhancing protection against frontrunning and sandwich attacks. Users can enable MEV protection with a simple one-click setup for most wallets, ensuring safer and more reliable trading.

Check out the latest prices, charts, and data of 

Ethena Labs and Securitize have launched 

, a settlement network designed to bridge traditional finance (TradFi) and DeFi. The platform will integrate Ethena’s USDe, USDtb, and iUSDe stablecoins with Securitize’s tokenized assets, facilitating institutional on-chain participation. Converge will feature both permissioned and permissionless financial applications, supporting lending, trading, and structured products. Five protocols, including Aave Labs and Pendle, have committed to building on the network. Mainnet is set to launch in Q2 2025.

Yesterday, BTC spot ETFs saw $232.3 million in net inflows, driven entirely by non-GBTC funds, while GBTC recorded no flow.

, allowing users to complete tasks and earn points for future rewards. Existing users from the old platform receive a 1,500-point bonus. To join, create an account, fill in profile details, and complete quests requiring X, Discord, and MetaMask connections. Daily check-ins also grant rewards, with more quests coming soon.

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Ethena and Securitize launch Converge to bridge TradFi and DeFi

Bubblemaps is a data visualization tool for blockchains. It uses colorful maps of circles to show important details. Learn more about how it works here.

 prior to their purchases. There's a lot of valuable information available for cryptocurrencies, but accessing and understanding it takes time. Bubblemaps offers a revolutionary solution: a 

 visualization tool that makes it much easier for users to see how blockchains operate behind the scenes. Should you try working with Bubblemaps? To see if it's right for you, here's what you need to know. 

 is a data visualization tool for blockchains. It uses colorful maps of circles to show important details, such as token distribution and disproportionate 

 token ownership — thus making it easier for investors to identify both trading opportunities and scams.

 in 2022. Before he worked on Bubblemaps, Vaiman was the CEO of a cryptocurrency investment company called Cryptonavia. During his work there, Vaiman noticed how difficult it was for investors to get a clear idea of how projects were run. Though there was often plenty of data revealing warning signs behind a project, it was hard to access and process this data. 

Vaiman was inspired to create a website where people could get useful information quickly. His vision has appealed to many investors, and Bubblemaps currently has over $3.2 million in funding from investors like Sierranova Capital, ChainGPT Labs and Arcanum Ventures.

Bubblemaps’ main purpose is to make cryptocurrency data more accessible. Traditional blockchain explorers often provide strings of data that aren't particularly intuitive. Meanwhile, the Bubblemaps site not only acquires data for you, but also uses its mapping system to make issues far more obvious. With “bubbles” that highlight info, such as linked wallets, the system hopes it can allow everyday investors to make more informed choices.

Bubblemaps also aims to become a watchdog for 

 and market manipulation. It regularly uses its tools to identify problematic projects and to draw attention to them. While users can analyze their own investments with Bubblemaps, the project also hopes to help people who don't work with the project’s software. The site's blog and social media feeds try to warn users of potential fraudulent activities involving trending cryptos whenever they can.

Bubblemaps primarily functions as a collection of software and coding. Unlike some other ecosystems, it doesn't have many blockchain functionalities embedded into its system. Instead, it operates similarly to standard Web 2.0 websites. Its creators designed code that scrolls through data about blockchain wallets and addresses, and then uses additional coding and display tools to sort and organize this data into easily readable Bubblemaps.

The Bubblemaps application can be accessed directly from the company's main website. Its system also allows other sites to integrate Bubblemaps as a 

 screener. With just a few lines of code, Bubblemaps analytics are natively integrated into other 

The Bubblemaps system contains a variety of features meant to improve blockchain data accessibility. The following are some of the ways users can enjoy Bubblemaps services.

This is the main feature of the website. Its users can search for tokens and click on a token to see its map. This visual representation of data looks like a series of circles and lines. The circles represent wallets holding significant portions of a token's total supply: the larger the circle, the more tokens the wallet holds. Lines drawn between wallets represent transfers, and highlight interconnected addresses. Clicking on the circles highlights the wallet's owner, and depending upon their privacy settings, you may even be able to see which individual or organization holds the tokens. 

Intel Desk is a community-driven feature for investigation. Users vote on which tokens need to be more closely examined. Winning tokens are carefully examined by Bubblemaps’ scam-detection squad, and users are told if any fraudulent activities have been found among a token's interconnected addresses and wallet holders.

The Time Travel feature lets users look at the past activity of multiple blockchains. You can see how maps shift over time, in order to get an idea of what's happening on blockchains throughout a coin's entire lifespan.

Magic Nodes is an advanced feature that shows interconnected addresses. Instead of just looking at wallet owner labels, Magic Nodes looks at how the crypto is actually moving around. For example, it can identify multiple holders who are all paying their gas fees from one address, so that users can see when an entity is using intermediaries to manipulate the market.

Bubblemaps has already managed to achieve a lot. In addition to designing its visual interpretation of blockchain data, the site has also natively integrated with various partners on other DeFi platforms. 

. In addition to the release of the token, the system also plans to add multiple features linked to the token, including upgrades to cross-chain analytics, AI cluster interpretation and P&L computation. 

For the future, Bubblemaps hopes to expand further into the crypto space. By adding multiple blockchains to its app and integrating with more systems, Bubblemaps aims to become the premier crypto and DEX screener. 

The BMT token helps power Bubblemaps’ Intel Desk feature. Holders of BMT vote for the cryptos they’d like Bubblemaps to investigate. BMT is also used as the reward method for those whose proposals are chosen for Intel Desk.

Residing on both Solana and BNB Chain, BMT has a total token supply of 1 billion tokens. Of these, 27% were available at launch. The rest will be unlocked on a 

Though BMT was only released in March 2025, it's already experienced some wild price swings. The token debuted at around $0.16, but prices quickly dropped to $0.07. Currently, BMT’s price is stable in the $0.08–$0.10 range.Bankless Times 

 will help keep its price up, predicting that BMT might reach $0.30 by 2025. DigitalCoinPrice is slightly more cautious, but agrees that some sort of price rise is likely. Taking into account current market growth,DigitalCoinPrice 

Looking to trade Bubblemaps tokens? Bybit now offers the BMT/USDT Spot trading pair and BMTUSDT Perpetual contract. To get started, you’ll first need to create a Bybit account, then fund it with cryptocurrency and navigate to the 

To celebrate this listing, Bybit is holding 

 where you can earn a share of a 2,000,000 BMT prize pool. 

BMT was hotly anticipated leading up to its release. The Bubblemaps tool is a favorite of crypto investors, and many people are interested in supporting the new project. Furthermore, the coin's link to the Intel Desk feature could help stabilize its price and create demand.

However, keep in mind that there’s been some criticism of BMT. Using the Bubblemaps tool on the system's own coin reveals that an outsized portion of the total supply is held by a single wallet. This has led to some 

, and the token’s price has stayed fairly low since this issue arose. While it's possible there's a good explanation for this distribution pattern, a lack of user trust could still cause problems for the new token. 

Therefore, investors who are interested in working with BMT token holdings need to maintain some caution. Furthermore, the crypto market always exhibits some volatility, so be sure to take that into account. As always, 

 — and avoid putting all of your funds into a single coin.

Using the Bubblemaps tool is a simple and great way to visualize the data from traditional blockchain explorers — making it quick and easy to spot potential problems with token holdings and distributions. Now that Bubblemaps is moving to the next level of its road map, fans also have the opportunity to buy and sell BMT tokens. Thanks to the hype around the platform, even investors who don’t use Bubblemaps may want to explore BMT.

Intermediate

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Bubblemaps (BMT): Bursting crypto's complexity bubble

Liquidity is the ability to buy or sell an asset quickly, without causing significant price fluctuations. Learn more here.

Liquidity is the lifeblood of efficient crypto trading. It determines how quickly and smoothly assets can be bought or sold at stable prices. And yet, many traders tend to overlook liquidity’s role in reducing 

, tightening spreads and improving execution speed — all of which directly impact profitability.

Bybit has made significant strides in improving liquidity across its trading pairs, ensuring that traders benefit from faster execution, better pricing and minimal market impact across both spot and derivatives markets. This article will explore what liquidity is, why it matters, how to measure it — and why Bybit offers one of the most liquid trading environments in the industry.

Liquidity is the ability to buy or sell an asset quickly, without causing significant price fluctuations. In crypto trading, liquidity is determined by trading volume, order book depth and market participation. A highly liquid market ensures tighter spreads, faster order execution and reduced slippage, providing a more stable and efficient trading experience.

. When many buyers and sellers actively place orders, transactions occur swiftly and price movements remain stable. Conversely, a lack of liquidity can lead to price gaps, delays and higher trading costs.

A deep order book is key to strong liquidity, with large quantities of buy and sell orders spread across multiple price levels. This means that when a trader places a large order, it’s absorbed by the existing orders, without drastically moving the market price. In contrast, an illiquid market has fewer participants and a shallower order book, so that a single order for an asset could drastically shift its price. This leads to greater price volatility and higher execution costs.

 play a crucial role in maintaining liquidity by continually placing buy and sell orders. By providing a steady flow of orders, they help stabilize prices and narrow the 

, ensuring smoother trading conditions for all participants.

In crypto trading, liquidity also varies between 

. Spot liquidity is reflected in lower spreads, meaning traders can buy or sell assets at more competitive prices. In contrast, lower slippage is the key measure in derivatives trading.

Liquidity has an impact on every aspect of trading, from execution speed to profitability. The following considerations make liquidity a key factor for traders.

A tighter bid-ask spread ensures traders 

 at fairer prices. This is especially beneficial for 

 who rely on small price movements for profits.

Minimal slippage and better price stability

Liquidity determines the degree to which an order affects price levels. In a highly liquid market, a $100,000 trade might move an asset’s price by only a fraction of a percent, while in an illiquid market, the same trade could cause a sharp price swing.

Liquidity allows traders to execute orders almost instantly at the expected price. In contrast, low-liquidity conditions may mean that, due to market fluctuations, orders will take longer to fill, or may execute at unfavorable prices.

During sudden price movements, a deep order book absorbs large trades, preventing extreme spikes or crashes. This is crucial for maintaining price stability in volatile markets: traders can execute strategies with greater confidence, knowing that price fluctuations will be more controlled.

How to identify and measure liquidity in crypto trading

While many traders assume liquidity is measured simply by trading volume, a deeper analysis is required to assess true liquidity conditions. The following section explains how traders can evaluate liquidity effectively.

A deeper order book means that multiple buy and sell orders exist across different price levels, supporting efficient trade execution with minimal price movement This is a strong indicator of liquidity, since it reflects a market’s ability to handle both small and large orders without sudden price fluctuations. 

 pair on Bybit has consistently shown strong order book depth, with the top three bid and ask levels holding significantly higher quantities as compared to other platforms. This enables smoother execution for all traders, from retail investors to institutions. 

A true test of liquidity is the degree to which the market price moves when executing a large order. In a highly liquid market, trades are absorbed across multiple levels, ensuring minimal slippage and price disruption. 

Traders can simulate a large market order by entering a significant trade volume and observing how much the price shifts before execution. A market order that significantly changes the last traded price suggests lower liquidity and potential inefficiencies in trade execution. 

For example, in order to move an asset’s price from $1,877.64 to $1877.66 on Bybit, you’ll need to buy 57.02856 + 168.67890 + 26.21569. Likewise, in order to move the price from $1,877.63 to $1,877.60, you’ll need to sell 114.28408 + 16.35036 + 17.30490.

Order absorption measures how well a market handles large trades without causing price spikes or slippage. A highly liquid market has deeper buy and sell walls, allowing it to process large transactions smoothly.

Here’s an example: For Bybit’s ETH/USDT pair, large trades require consuming multiple price levels before affecting the last traded price. This ensures stability even during high trading volumes. A trader purchasing 30 ETH only absorbs Level 1 and Level 2 sell orders, whereas on lower-liquidity platforms, multiple levels would be affected, increasing price volatility.

This high order absorption capacity is vital for traders executing large transactions, ensuring consistent execution quality across all market conditions.

The bid-ask spread represents the difference between the highest bid price (what buyers are willing to pay) and the lowest ask price (what sellers are willing to accept). A narrower spread indicates stronger liquidity, because it means there are many active buyers and sellers competing for the best prices. Conversely, a wider spread suggests a more illiquid market, leading to higher trading costs and greater price fluctuations.

The first consideration is to compare the order book depths between different exchanges. Exchanges with higher quantities at each price level (for both bid and ask) suggest higher liquidity.

Step 1: Identify the initial market price

Step 2: Simulate a market order (without executing it)

Step 3: Calculate the final execution price

Step 5: Compare the market impact between exchanges

Bybit’s approach to liquidity: Building the best trading experience

Bybit has implemented advanced liquidity solutions to ensure traders experience tight spreads, fast execution and minimal slippage.

One of Bybit’s most significant advancements is its Retail Price Improvement (

) Order, a first-of-its-kind feature designed to enhance liquidity specifically for retail traders. Unlike traditional market-making models, which oftentimes prioritize institutional orders, RPI orders provide retail traders with access to deeper liquidity pools, ensuring better prices and deeper order book support.

Bybit has also strengthened its liquidity infrastructure through strategic partnerships with institutional liquidity providers. These collaborations increase market depth, reduce slippage and improve overall trading efficiency across both spot and derivatives markets.

The impact of Bybit’s liquidity innovations

Following the introduction of RPI orders and enhanced market-making strategies, Bybit has seen substantial improvements in liquidity across key trading pairs. The results are clear:

Bybit’s liquidity enhancements have created a more efficient and stable trading environment, benefiting both retail and institutional traders.

For retail traders, Bybit’s liquidity improvements mean faster order execution, lower trading costs and better pricing. By ensuring better liquidity conditions, Bybit makes it possible for traders to execute their strategies with greater confidence and efficiency.

For high-volume and institutional traders, deeper liquidity pools ensure that large orders can be executed without significantly moving the market price. This is crucial for traders managing large portfolios or executing algorithmic trading strategies.

Bybit’s liquidity solutions also enhance overall market efficiency, improving execution quality across all trading pairs.

Liquidity is the backbone of efficient crypto trading, shaping everything from execution speed to price stability. Bybit has consistently demonstrated its commitment to providing a highly liquid market through innovations like RPI orders, deep order book depth and strategic partnerships with institutional liquidity providers.

Whether you’re a retail trader seeking tighter spreads and faster execution or an institutional trader executing large orders with minimal price impact, Bybit will offer you a best-in-class trading experience. 

If you value fast execution, minimal slippage and a robust liquidity environment, Bybit is the exchange of choice.

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Liquidity in crypto trading: Why it matters and how to spot the best conditions

Trading

Risk management involves cautious planning to identify, analyze and limit the potential losses by formulating contingency plans to cushion the unfavorable moments. Learn more.

Ask any seasoned trader and they’ll confirm that successful trading hinges on managing risk as well as picking winning trades. Think about it: Crypto trading is extremely volatile and potentially lucrative, but it also comes with considerable risks that can wipe out your capital in seconds. Having a proper risk management system can mitigate these risks.

Here’s the good news: This blog post will teach you how to use crypto risk management to minimize risk — and increase your likelihood of cryptocurrency trading success.

Crypto risk management is the process of identifying, analyzing and controlling the potential losses that may arise from crypto trading.

It involves a comprehensive approach, encompassing goal setting, risk appetite definition, capital allocation, portfolio diversification and appropriate trading strategies and tools. This strategy helps avoid emotional trading decisions and encourages rational, disciplined decision-making. 

Crypto risk management aims to safeguard your capital from unfavorable market fluctuations and help you secure sustainable returns.

How to Assess and Formulate a Crypto Trading Plan

To achieve success in trading, you need to have a clear understanding of your goals and strategies. A crypto trading plan is a comprehensive document that outlines your risk profile, trading style, tools, indicators, entry and exit rules, and performance evaluation methods. It helps you stay focused, avoid impulsive actions, adapt to market changes and learn from mistakes. In order to create a robust trading plan, you must be well-versed in risk management and measurement techniques.

Familiarizing Yourself With the Risk Management Process

To effectively manage risk in trading, here are four key steps to follow:

When it comes to managing risk, measuring it is essential. Various metrics can help you quantify the risk involved in your trading activities.

The crypto market holds various risks that can affect your trading performance. Some of the main market risks are as follows.

Legal risks in crypto arise from unclear or inconsistent regulations, enforcement or compliance. For instance, you may face legal issues if your jurisdiction bans or restricts crypto assets; if your exchange or wallet is hacked, shut down or seized by authorities; or if you fail to report or pay taxes on your crypto transactions or holdings. 

Technology and security risks are a legitimate concern with crypto assets. Technical failures, glitches, bugs, hacks or attacks may compromise your crypto assets or platforms' functionality, integrity or availability. Congestion, delays, forks or upgrades in the network or protocol that supports your crypto assets are all possible technology and security issues. 

Other risks include downtime, errors, breaches or thefts in the exchange or wallet you use to trade or store your crypto assets; and damage, loss, theft, infection or corruption in the device or software that you use to access your crypto assets.

Exchange risk means encountering unfavorable price movements because of differences in supply and demand across various exchanges. This situation can occur when the exchange on which you trade your crypto assets has lower or higher prices, liquidity or fees than another exchange that’s involved when you’re transferring, withdrawing or depositing your assets. 

Liquidity risk arises when trading crypto assets becomes difficult due to a lack of buyers or sellers in the market, resulting in unfavorable prices. Thin, volatile or illiquid markets, low volume or depth on exchanges, and off-peak trading times are examples of conditions that can lead to liquidity risk. 

Leverage risk, which occurs when using borrowed funds or 

, can lead to amplified losses. For instance, this risk can arise when the value of your crypto assets moves against your position and causes a margin call or 

, or when unexpected increases in interest rates or borrowing fees occur. In addition, if the exchange you’ve borrowed funds from changes its margin requirements or terms without warning, you may face leverage risk. 

The term "risk of ruin" describes the possibility of losing all your trading capital due to consecutive losses. These losses can occur if you overtrade, trade with positions that are too large relative to your capital, use high leverage or a low stop-loss level, or experience a 

Top Crypto Trading Techniques for Risk Management

Top crypto trading techniques help you improve crypto trading performance and reduce risks. Following are some well-known crypto trading strategies.

To effectively analyze a crypto asset’s price movements, evaluate different time frames, such as daily, hourly or minute charts. This approach can help identify trends and patterns in long-, medium- and short-term markets. It can also confirm the validity and strength of signals and indicators, and help pinpoint ideal entry and exit points. For optimal results, choose a primary time frame that aligns with your trading style and objectives, a secondary time frame that provides a bigger market picture and a tertiary time frame to fine-tune your trades.

Position sizing entails determining the optimal amount of money to risk, based on your risk tolerance and available capital. This technique can help you achieve consistent and sustainable returns by avoiding the pitfalls of risking too much or too little on each trade. 

To use this method, start by defining your maximum risk per trade as a percentage of your total capital (e.g., 1%, 2%, etc.), and then calculate your position size by dividing your maximum risk by your stop-loss distance (e.g., if your maximum risk is $100 and your stop-loss level is 10%, your position size is $1,000). Finally, adjust your position size based on the volatility and liquidity of the crypto asset you're trading.

Before entering a trade, compare your potential reward and risk using a profitability and feasibility evaluation technique. This approach can help you avoid trades with low chances of success or high potential loss, while maximizing profits and minimizing losses. 

In order to use this technique effectively, define your target and stop-loss prices for each trade. Calculate your reward/risk ratio by dividing potential reward by potential risk. For instance, you can achieve a ratio of 2 if your target price is $1,200 and your stop-loss price is $1,000. Choose trades with a reward/risk ratio greater than 1, ideally higher than 2.

To safeguard your capital and avoid emotional stress, set a predetermined price level at which to automatically exit a losing trade. This technique also enhances your discipline and confidence. To make it work, place your stop loss at a strategic price level based on 

, such as support or resistance levels, trend lines or moving averages. Be careful not to set your stop loss too close or far from your entry price. A general rule of thumb is to avoid placing it less than 1%, or over 10%. As the market moves in your favor, consider moving your stop loss to break-even or a profitable position using a trailing stop loss.

One powerful technique is to capitalize on a sudden and significant surge in the price of a cryptocurrency asset caused by the forced liquidation of short sellers. This approach offers several advantages, including the ability to profit from sharp and swift price movements, exploit the vulnerability and panic of short sellers, and anticipate and confirm a downtrend reversal. 

To utilize this method, begin by identifying a crypto asset with high short-interest and low liquidity. Wait for a positive catalyst or strong bullish signal that can trigger a short squeeze before buying the asset and setting a tight stop-loss and high target price. Exit the trade once the short squeeze ends, or when the market displays signs of exhaustion or reversal.

How to Use Crypto Portfolio Management Tools to Limit Risks

Besides using trading techniques, you can also implement various tools to help you manage your crypto portfolio and limit your risks. Some of the main types of tools are as follows.

These tools help you analyze price movements and trends in the crypto market using mathematical formulas, algorithms or patterns. They can help you to:

Some examples of technical analysis tools are as follows:

These are tools that help you manage your crypto portfolio and optimize your performance using various features and functions. They can help you to:

Some examples of portfolio management tools are as follows.

Crypto trading is a rewarding but risky activity that requires proper risk management. By following the tips and techniques discussed above, you can reduce your risk and increase your chances of success in the crypto market.

Remember that risk management isn’t a one-time event, but rather an ongoing process that requires constant monitoring and adjustment. Therefore, keep learning and improving, and adapting to the changing market conditions.

Now that you are familiar with risk management, you can take this chance to 

 and take weekly quizzes to win a share of the 3,000 USDT prize pool! The event runs from Oct 9, 2023, 1PM UTC to Dec 17, 2023, 1PM UTC. Make sure not to miss this exciting opportunity to win great prizes!

Crypto Trading Risk Management: How to Mitigate Risk Exposure

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards