Cryptocurrencies are a complicated, interconnected, and technical concept whose value is still being proven. Above, we jumped on some of the drawbacks to cryptocurrencies, such as their use for some illegal activities by criminals.
How To Trade Cryptocurrency on Robinhood - Fliptroniks.com
Even if you’re not a criminal, there are still critical risks to recognize when trading cryptocurrencies. For example, cryptocurrency prices can change radically in a trading day given how few places there are to trade them and their uncertain value and regulatory status.
Crypto exchanges are also sometimes vulnerable to hacks in which coins are stolen, which has happened before to some notable exchanges.
Purchasing cryptocurrencies comes with a number of risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks.
In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing.
Cryptocurrency trading can be extremely risky.
Cryptocurrency trading may not generally be appropriate, particularly with funds drawn from retirement savings, student loans, mortgages, emergency funds, or funds set aside for other purposes.
Cryptocurrency trading can lead to large and immediate financial losses.
Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price.
This can occur, for example, when the market for a particular cryptocurrency suddenly drops, or if trading is halted due to recent news events, unusual trading activity, or changes in the underlying cryptocurrency system.