News significantly impacts crypto markets, but the effect isn’t uniform across all assets. Bitcoin, the market leader, exhibits a pronounced “negativity bias,” meaning bad news hits harder than good news on price returns. This asymmetry is partly due to Bitcoin’s status as a perceived safe haven – negative news triggers sell-offs, while positive news is often already priced in.
Volatility and liquidity are directly correlated with news sentiment. Positive news generally boosts both, attracting investors and increasing trading volume. Conversely, negative news often leads to decreased liquidity as traders exit their positions simultaneously, exacerbating price drops. This “flight to safety” effect is particularly pronounced during periods of broader market uncertainty.
It’s crucial to understand that the impact of news isn’t immediate or always predictable. The speed and magnitude of the reaction depend on several factors, including the credibility of the source, the severity of the news, and the overall market sentiment. A seemingly minor news item can trigger a significant price swing if it aligns with pre-existing anxieties.
Furthermore, the specific type of news matters. Regulatory announcements have a disproportionate impact, often causing sharp and sustained price movements. Technical developments, conversely, can have a more gradual effect, depending on their perceived long-term implications. Experienced traders analyze news within the broader context of market dynamics and technical indicators to assess its actual influence.
Analyzing news sentiment is a key skill. Don’t just focus on headlines; delve into the details and consider the potential biases of the source. Understanding the nuanced implications of news allows for more informed trading decisions and better risk management.
What is affecting the crypto market?
The current crypto downturn is a confluence of factors, not a single event. Regulatory uncertainty, particularly in the US, is creating significant headwinds. The SEC’s aggressive stance on staking and the ongoing debate around Bitcoin ETFs are chilling investor sentiment and impacting liquidity. Macroeconomic factors, like persistent inflation and rising interest rates, are further exacerbating the situation; risk-off sentiment is driving capital away from speculative assets like crypto.
Market liquidations, triggered by margin calls and leveraged positions, amplify downward pressure, creating a vicious cycle. We’re seeing this play out across the board, with altcoins like Ethereum, Solana, and XRP particularly vulnerable due to their higher volatility. Even institutional investors, previously considered a stabilizing force, are experiencing losses. BlackRock and MicroStrategy’s reduced holdings underscore the severity of the current market conditions. The on-chain data paints a picture of decreased network activity and reduced on-chain value transferred, indicating reduced user engagement and overall market health.
It’s crucial to remember that these market corrections are a normal part of the crypto lifecycle. However, the current environment demands a cautious approach. Diversification, risk management, and a long-term perspective are essential for navigating these turbulent waters. While the short-term outlook remains uncertain, focusing on fundamental analysis and technological advancements within the ecosystem can help identify promising opportunities amidst the volatility.
What do you think about cryptocurrency?
Cryptocurrencies offer compelling advantages like significantly cheaper and faster international transfers compared to traditional banking systems. Their decentralized nature enhances resilience, mitigating risks associated with single points of failure inherent in centralized systems. However, the substantial price volatility represents a major hurdle, making them a highly speculative asset class. This volatility is driven by factors ranging from regulatory uncertainty and macroeconomic conditions to market manipulation and FOMO-driven trading. Furthermore, the energy-intensive mining process, particularly for proof-of-work cryptocurrencies like Bitcoin, raises serious environmental concerns and has spurred interest in more energy-efficient consensus mechanisms such as proof-of-stake. Understanding on-chain metrics like network hash rate, transaction volume, and active addresses is crucial for gauging market sentiment and potential price movements. Moreover, technical analysis, including chart patterns and indicators, plays a vital role in navigating the volatile cryptocurrency landscape. Diversification across different cryptocurrencies and asset classes is essential for managing risk. Ultimately, successful cryptocurrency trading requires a sophisticated understanding of both the underlying technology and the market dynamics at play.
What are the pros and cons of the crypto market?
The cryptocurrency market presents a compelling dichotomy of advantages and disadvantages. On the plus side, cryptographic techniques underpin robust security, minimizing the risk of fraud and double-spending compared to traditional financial systems. Global accessibility, unconstrained by geographical boundaries or banking infrastructure, fosters financial inclusion. The transparent, publicly auditable nature of blockchain technology enhances trust and accountability, although this transparency can also reveal sensitive information depending on the specific blockchain and implementation. Furthermore, smart contracts automate processes and reduce intermediary fees, leading to significantly lower transaction costs in many cases. Beyond this, the emergence of decentralized finance (DeFi) unlocks innovative financial products and services.
However, the inherent volatility of cryptocurrency prices poses a significant risk for investors. Price fluctuations can be dramatic and unpredictable, influenced by speculation, regulatory announcements, and technological developments. The lack of comprehensive global regulation creates uncertainty and exposes investors to potential scams and manipulative practices. While user-friendly interfaces are emerging, the underlying technology still presents technical barriers to entry for many, requiring a certain level of technical proficiency. The potential for misuse, including illicit activities like money laundering and dark web transactions, remains a concern, though blockchain analysis techniques are constantly evolving to mitigate this.
Furthermore, scalability remains a challenge for many cryptocurrencies. High transaction volume can lead to network congestion and increased fees, impacting user experience and hindering widespread adoption. Energy consumption associated with proof-of-work consensus mechanisms, prevalent in some prominent cryptocurrencies, is another environmental concern actively being addressed through alternative consensus methods like proof-of-stake. Finally, the security of private keys, which grant control over cryptocurrency holdings, is paramount, and their loss can result in the irreversible loss of funds. Therefore, robust security practices and the use of hardware wallets are strongly recommended.
What is the impact of cryptocurrency on society?
Cryptocurrency’s societal impact is multifaceted and far-reaching. While touted for greater global integration by circumventing traditional currency barriers, the reality is more nuanced. Increased financial inclusion is a key benefit, offering access to financial services for the unbanked and underbanked populations worldwide. This is particularly significant in developing nations lacking robust traditional banking infrastructure. However, this inclusion is often hampered by lack of widespread education and understanding about cryptocurrency’s complexities and inherent risks.
Decentralization, a core tenet of many cryptocurrencies, presents both opportunities and challenges. While promising increased financial sovereignty and reduced reliance on centralized authorities, it also raises concerns about regulatory gaps and the potential for illicit activities, including money laundering and terrorist financing. The inherent volatility of many cryptocurrencies also poses a significant risk to users, potentially leading to substantial financial losses.
Furthermore, the environmental impact of certain cryptocurrencies, particularly those employing energy-intensive proof-of-work consensus mechanisms, is a growing concern. The substantial energy consumption associated with mining some cryptocurrencies raises questions about their long-term sustainability. The development of more energy-efficient consensus mechanisms, such as proof-of-stake, is crucial to mitigate this issue. Finally, the increasing prevalence of crypto scams and fraudulent activities underscores the need for stronger consumer protection and regulatory frameworks.
Beyond the financial aspects, the development of decentralized applications (dApps) built on blockchain technology is transforming various sectors, including supply chain management, healthcare, and voting systems. This fosters increased transparency and traceability, potentially improving efficiency and trust. However, the scalability and interoperability challenges associated with blockchain technology still hinder widespread adoption.
What events affect crypto?
Several factors significantly impact crypto prices, often interplaying in complex ways. Adoption is key: institutional investment, government recognition (or lack thereof), and widespread consumer usage drive demand and price. Macroeconomic conditions are crucial; inflation, interest rate hikes, and overall economic performance influence risk appetite, directly affecting crypto’s perceived value as a hedge or investment. Central bank policies, particularly concerning monetary supply and digital currencies, exert considerable influence. Regulatory actions – whether favorable or restrictive – can trigger dramatic price swings. Geopolitical events and global uncertainty introduce volatility, often pushing investors towards safer assets or into crypto as a haven depending on the situation. Accessibility, encompassing ease of purchasing, trading, and using crypto, impacts adoption rates. Finally, network upgrades (e.g., hard forks, scaling solutions) can positively or negatively influence a coin’s utility and price, depending on their success and market perception.
Beyond these, consider market sentiment (fear, greed, hype cycles), the influence of large holders (“whales”) on price manipulation, and the constant innovation within the crypto space (new projects, technologies). Understanding these interconnected forces is vital for navigating the crypto market’s inherent volatility. Remember that correlation doesn’t equal causation: While events can strongly *correlate* with price movements, pinpointing precise *causality* is complex and often debated.
Technical analysis plays a substantial role. Price charts, volume, and indicators provide insights into market trends, potential support and resistance levels, and help traders identify entry and exit points. Fundamental analysis complements this by examining underlying project value, adoption rates, and technological advancements. A skilled trader employs both methods to inform their decisions, recognizing the dynamic and often unpredictable nature of the cryptocurrency market.
What is the biggest disadvantage of cryptocurrency?
A huge downside of crypto is the lack of robust transaction reversal policies. Unlike traditional finance, there’s typically no chargeback or refund mechanism if you send funds to the wrong address or fall victim to a scam. This “no-take-backs” approach is inherent to the decentralized nature of many cryptocurrencies; transactions are immutable once confirmed on the blockchain. Each exchange or wallet provider might offer some level of user protection, but it’s far from standardized and often limited in scope.
Consider this: a misplaced decimal point in a transfer could mean a substantial loss, unrecoverable unless the recipient is cooperative (which is unlikely). This underscores the importance of double, triple-checking addresses and transaction details before sending any crypto. Security best practices, like using reputable exchanges and hardware wallets, become even more crucial given this inherent risk.
While some projects are exploring mechanisms to mitigate this, a truly universal and effective solution remains elusive. The current state of affairs emphasizes the need for extreme caution and diligence when interacting with cryptocurrencies.
What is the warning about the crypto market?
The crypto market is characterized by extreme volatility; price swings of 10% or more in a single day are commonplace. This inherent risk is amplified by the nascent regulatory landscape, leaving investors largely unprotected. While potential returns are high, so are the chances of significant losses. Don’t invest more than you can afford to lose completely.
Due diligence is paramount. Thoroughly research any project before investing, paying close attention to the team, technology, tokenomics, and whitepaper. Be wary of get-rich-quick schemes and promises of guaranteed returns; these are almost always scams.
Diversification is key to mitigating risk. Don’t put all your eggs in one basket. Spread your investments across various cryptocurrencies and asset classes to reduce exposure to individual project failures. Consider diversifying beyond just crypto into more established markets as well.
Security is critical. Employ strong passwords, utilize hardware wallets for storing significant holdings, and be extremely cautious of phishing attempts and malicious software. Regularly review your portfolio and transaction history to detect any unauthorized activity.
Tax implications are significant and complex. Cryptocurrency transactions are taxable events in many jurisdictions. Consult with a tax professional to understand your obligations and plan accordingly.
Market manipulation is a reality. Large holders can significantly influence prices, leading to sudden and unpredictable drops. Be aware of this inherent risk and don’t panic sell during market downturns unless your risk tolerance has been exceeded.
What are the negative effects of crypto?
Cryptocurrency’s volatility poses significant risk; massive price swings can wipe out investments rapidly. Lack of regulatory oversight leaves investors vulnerable to scams and manipulation. The anonymity afforded by some cryptocurrencies facilitates illicit activities, including money laundering and financing terrorism. Security risks are substantial; exchanges and wallets are frequent targets of hacks, resulting in significant losses for users. Furthermore, the environmental impact of proof-of-work cryptocurrencies is considerable due to high energy consumption. Transaction fees can be unpredictable and significantly higher than traditional payment methods, especially during periods of network congestion. The complexity of the technology and the lack of widespread understanding create significant barriers to entry and increase the risk of uninformed investment decisions. Finally, while some transactions are pseudonymous, the blockchain’s public ledger reveals a degree of transaction information, compromising privacy to varying degrees depending on the cryptocurrency.
What are the risks of cryptocurrency?
Cryptocurrencies are notorious for their volatility. Unlike traditional assets like stocks or bonds, crypto asset prices can swing wildly in short periods. This means significant price increases are possible, but equally, substantial losses are a real and present danger. The risk of losing your entire investment is very high.
Market Manipulation: The relatively smaller size of some cryptocurrency markets makes them susceptible to manipulation by whales (individuals or groups holding large amounts of a particular cryptocurrency) who can artificially inflate or deflate prices for their own benefit. This can lead to sudden and unpredictable price crashes affecting even long-term investors.
Regulatory Uncertainty: The regulatory landscape for cryptocurrencies is still evolving globally. Changes in regulations can significantly impact the value of your holdings. Lack of clear legal frameworks increases the risk of scams and fraudulent activities.
Security Risks: Cryptocurrency exchanges and wallets can be targets for hacking and theft. Losing your private keys means losing access to your funds, with little or no recourse available. Strong security practices are crucial, but the risk of loss remains.
Technological Risks: The underlying technology of cryptocurrencies is constantly evolving. Hard forks, software bugs, and unexpected technological developments can all affect the value and functionality of your assets.
Scams and Fraud: The cryptocurrency space is unfortunately rife with scams, including fraudulent ICOs (Initial Coin Offerings), pump-and-dump schemes, and phishing attacks. Thorough due diligence is essential before investing in any cryptocurrency.
Lack of Consumer Protection: Unlike traditional financial markets, the cryptocurrency market often lacks robust consumer protection mechanisms. This means that if something goes wrong, you may have limited options for recovering your losses.
Environmental Concerns: The energy consumption associated with some cryptocurrencies, particularly Bitcoin, has raised significant environmental concerns. The carbon footprint of certain cryptocurrencies can be substantial.
Why is Bitcoin falling down today?
Bitcoin’s recent dip below $26,000 isn’t surprising. The post-reserve announcement rally lacked conviction, a telltale sign of underlying weakness. The White House summit, while seemingly positive, likely heightened regulatory uncertainty for many investors, fueling a risk-off sentiment already present due to looming economic concerns. This 4%+ drop reflects a market grappling with macroeconomic headwinds; inflation remains stubbornly high, and central bank actions continue to impact risk assets. Key takeaway: This isn’t necessarily a bearish signal in the long term, but a correction within a broader consolidation phase. Look at the on-chain metrics – things like miner capitulation and exchange inflows – for better insights into true market sentiment rather than focusing solely on price action. Short-term volatility is expected; strategic long-term holders shouldn’t panic.
Furthermore, the lack of significant institutional adoption beyond a few key players continues to limit upward momentum. Remember, Bitcoin’s price is heavily influenced by market sentiment, which is currently swayed by macroeconomic anxieties. Focus on fundamental analysis, diversify your portfolio, and adjust your risk tolerance accordingly. This is a classic example of a market reacting to news – not necessarily a reflection of Bitcoin’s underlying value proposition.
How cryptocurrencies impact the economy?
Cryptocurrencies’ impact on the economy is multifaceted and evolving. While their potential to diversify foreign reserves is significant, the mechanism is more complex than simply replacing dollar reserves. A leading cryptocurrency, like Bitcoin, could act as a hedge against dollar devaluation stemming from geopolitical instability or inflationary pressures affecting other reserve assets like gold or the Euro. This diversification effect, however, hinges on the cryptocurrency’s price stability and market maturity.
Challenges and Considerations:
- Volatility: Cryptocurrency prices are notoriously volatile, posing a significant risk to any reserve holding them. The inherent price swings could exacerbate, rather than mitigate, economic shocks if not properly managed.
- Regulation and Legal Framework: The lack of a universally accepted regulatory framework creates uncertainty and potential legal challenges for nations integrating cryptocurrencies into their reserves.
- Scalability and Transaction Costs: Processing large-scale transactions with certain cryptocurrencies can be slow and expensive, impacting their usability as a reserve asset.
- Security Risks: Cryptocurrency exchanges and wallets are vulnerable to hacking and theft, posing a significant risk to national reserves.
Beyond Diversification:
- Enhanced Financial Inclusion: Cryptocurrencies can potentially facilitate cross-border payments and reduce reliance on traditional banking systems, particularly beneficial for developing economies.
- Programmable Money: Smart contracts and decentralized finance (DeFi) built upon blockchain technology can revolutionize financial services, offering new possibilities for international trade and finance.
- Central Bank Digital Currencies (CBDCs): The emergence of CBDCs represents a potential evolution of monetary policy, potentially integrating some aspects of cryptocurrency technology while maintaining central bank control.
Increased Confidence: While a diversified reserve including cryptocurrencies *could* enhance confidence in the dollar indirectly by reducing reliance on vulnerable assets, this is dependent on the broader adoption and stability of the cryptocurrency itself. It’s not a direct causal link.
Why is cryptocurrency important today?
Cryptocurrencies are gaining prominence as a decentralized medium of exchange, utilizing a digital ledger – often a blockchain – to record ownership. This differs significantly from traditional fiat currencies issued and controlled by governments. The decentralized nature, a key characteristic, theoretically makes cryptocurrencies resistant to government manipulation and censorship, offering a potential alternative financial system.
This immutability, however, isn’t absolute. While transactions are generally tamper-proof once recorded on the blockchain, vulnerabilities in the underlying code or exchanges handling the cryptocurrencies can still be exploited. Furthermore, the regulatory landscape surrounding cryptocurrencies is constantly evolving, with governments worldwide actively exploring ways to oversee and potentially regulate their use.
Beyond their use as a medium of exchange, cryptocurrencies are also fueling innovation in areas like decentralized finance (DeFi). DeFi platforms leverage blockchain technology to offer a range of financial services, such as lending, borrowing, and trading, without the need for intermediaries like banks. This presents potential benefits in terms of efficiency and accessibility, but also introduces new risks and challenges.
The inherent volatility of many cryptocurrencies is another crucial aspect to consider. Their prices can fluctuate dramatically in short periods, making them a risky investment for many. Understanding the technology, associated risks, and regulatory developments is essential before engaging with cryptocurrencies.
Finally, the energy consumption associated with certain cryptocurrencies, particularly those using proof-of-work consensus mechanisms like Bitcoin, raises environmental concerns that are increasingly being addressed through research and development of more energy-efficient alternatives, like proof-of-stake.
Why is crypto market crashing down?
The current crypto market downturn is multifaceted, not solely attributable to headline-grabbing events. While concerns over a potential trade war and underwhelming reaction to the president’s national crypto reserve announcement certainly contributed to negative sentiment, these are merely catalysts exacerbating pre-existing vulnerabilities.
Liquidity Crunch: The market is experiencing a significant liquidity crunch. Over-leveraged positions, particularly in DeFi protocols, are being liquidated en masse, creating a domino effect. This amplified the impact of negative news.
Regulatory Uncertainty: Ongoing regulatory uncertainty, particularly in the US, continues to weigh heavily on investor confidence. The lack of clear guidelines fosters hesitation and discourages institutional investment.
Macroeconomic Headwinds: Trump’s comments about a potential recession are a reflection of broader macroeconomic anxieties. Rising interest rates, inflation, and geopolitical instability all contribute to a risk-off environment, driving capital away from speculative assets like cryptocurrencies.
Bitcoin Dominance: Bitcoin’s price action heavily influences the altcoin market. A decline in Bitcoin’s price typically triggers cascading sell-offs across the entire crypto ecosystem. This correlation needs to be factored into any analysis.
Technical Indicators: Key technical indicators, such as the RSI and MACD, are showing signs of oversold conditions, suggesting a potential bounce. However, this should not be interpreted as a definitive signal for a sustained upward trend; it merely reflects potential short-term price reversals within a larger bearish context.
What is the problem with crypto?
The inherent volatility of crypto is a direct consequence of its decentralized nature. Unlike fiat currencies stabilized by government intervention, crypto’s value fluctuates wildly based on market sentiment, technological advancements, and regulatory uncertainty. This lack of a central authority backing it, while lauded by some as a benefit, translates to significant risk for investors. This is not inherently bad, just different. It’s a high-risk, high-reward game.
Security is another major concern. While blockchain technology is inherently secure, the user’s responsibility for their private keys creates a substantial vulnerability. Exchanges, while offering convenience, are frequent targets for hacking and theft. Self-custody, while the ultimate security measure, demands technical expertise and diligence most lack.
- Regulatory uncertainty: The legal landscape for crypto remains unclear in many jurisdictions, leading to uncertainty and potential future restrictions.
- Scalability issues: Some cryptocurrencies struggle to handle a large number of transactions, impacting their usability and speed.
- Environmental impact: The energy consumption of certain cryptocurrencies, particularly those using Proof-of-Work consensus mechanisms, is a significant environmental concern.
Furthermore, the opacity of many crypto projects and the prevalence of scams and pump-and-dump schemes represent substantial challenges. Due diligence is absolutely paramount. Don’t invest in anything you don’t fully understand.
- Always perform thorough research. Examine the team, the technology, and the market potential.
- Diversify your portfolio. Don’t put all your eggs in one basket.
- Secure your assets. Use strong passwords, hardware wallets, and reputable exchanges (if using exchanges at all).
Why is crypto market crashing?
The recent crypto market downturn is a confluence of several significant factors, not a single event. The escalating trade tensions and the perceived lack of concrete regulatory clarity, particularly regarding a national crypto reserve, have significantly dampened investor sentiment. This uncertainty breeds fear, prompting profit-taking and a sell-off.
Macroeconomic Headwinds: The potential for a recession, fueled by recent pronouncements from prominent figures, adds another layer of complexity. Investors often move towards safer assets during times of economic uncertainty, leading to capital flight away from riskier investments like cryptocurrencies. This risk aversion is further amplified by the inherent volatility of the crypto market.
Specific Impacts:
- Reduced Institutional Investment: Concerns about regulation and macroeconomic instability are discouraging large institutional investors from entering or increasing their positions in the crypto market. This lack of institutional support contributes to decreased liquidity and price volatility.
- Retail Investor Sentiment: News about potential recessions and trade wars negatively impacts retail investor confidence. This often translates into panic selling, exacerbating price drops.
Beyond the Headlines: It’s crucial to understand that market corrections are a natural part of the crypto cycle. While the current downturn is significant, it’s important to avoid knee-jerk reactions. Analyzing the underlying fundamentals of individual projects remains crucial. Focus on projects with strong technological foundations, active development, and a demonstrable use case, as these are more likely to weather market volatility.
Long-Term Perspective: While short-term price fluctuations can be dramatic, the long-term prospects for cryptocurrencies remain a subject of ongoing debate. Technological advancements and increasing adoption continue to fuel optimism among some investors, suggesting a potential for future growth. However, this growth is not guaranteed and depends heavily on regulatory clarity and macroeconomic stability.
What is the major problem with cryptocurrency?
The inherent volatility of cryptocurrencies presents the biggest challenge. Their value fluctuates wildly, driven by speculation, regulatory changes, technological advancements, and market sentiment – factors far less predictable than traditional assets. A significant drop in value isn’t just a loss of potential gains; it represents real, irreversible financial damage if you’re forced to sell at a loss. This unpredictability stems from the decentralized nature of crypto; unlike stocks backed by company assets or bonds secured by government guarantees, crypto’s value rests solely on market perception and adoption. This lack of intrinsic value makes it vulnerable to “pump and dump” schemes and market manipulation. Furthermore, the nascent regulatory landscape globally creates further uncertainty, with potential for sudden policy changes impacting value. While some cryptocurrencies aim for stability through algorithmic mechanisms or backing, the overall market remains highly speculative and carries substantial risk.
Consider this: the technology itself is constantly evolving, with new protocols and coins emerging regularly. This constant innovation, while exciting, also fragments the market, making it difficult to identify truly valuable long-term investments amidst the hype. Even established cryptocurrencies face the threat of being surpassed by newer, potentially superior technologies. Therefore, any investment should be approached with extreme caution, representing only a small portion of a diversified portfolio and factoring in the high likelihood of significant loss.
Is it worth investing in crypto right now?
Crypto’s mainstream adoption is undeniable; institutional investment is surging, and it’s rapidly integrating into the global financial system. The US government’s support, even at the highest levels, significantly reduces regulatory uncertainty – a major hurdle for mass adoption. This is a bullish signal.
Bitcoin’s dominance remains significant, acting as a safe haven asset within the crypto market. While altcoins offer higher potential returns, they also carry substantially more risk. Focusing on Bitcoin minimizes this risk while still capitalizing on the broader crypto market’s growth.
Several factors contribute to this positive outlook:
- Increasing scarcity: Bitcoin’s fixed supply of 21 million coins makes it deflationary, contrasting with inflationary fiat currencies.
- Growing institutional demand: Large financial institutions are allocating significant portions of their portfolios to Bitcoin, signifying increased legitimacy and trust.
- Technological advancements: The Lightning Network and other second-layer solutions are improving Bitcoin’s scalability and transaction speed, addressing previous limitations.
However, it’s crucial to acknowledge the inherent risks:
- Volatility: Bitcoin’s price is notoriously volatile, experiencing significant price swings in short periods.
- Regulatory uncertainty (despite recent progress): While US government support is positive, global regulatory landscapes remain fragmented and could shift unexpectedly.
- Security risks: Losing access to your private keys can lead to irreversible loss of funds; proper security measures are paramount.
Despite these risks, the current climate strongly suggests a favorable entry point for long-term Bitcoin investors. Dollar-cost averaging is a prudent strategy to mitigate volatility risk.
