The central bank and key leaders are raising more warnings for rising inflation, which has raised suspicions around the world. Recently, U.S. Treasury Secretary Janet Yellen called on Congress to raise or suspend the U.S. debt limit, saying the government would run out of money to pay government bills by October.
What looks like a horror film of the future is the news in front of global financial publications right now. Yellen said the irresistible sensitivities between economists and Treasury officials on both sides were that failing to raise the threshold would lead to a massive economic catastrophe, “a potentially historic financial crisis, stock sales and a recession, causing severe market instability.”
The U.S. dollar will continue to depreciate in the future, and individuals need easier, simpler, rather than complexity to protect themselves from financial risk and diversify their portfolios.
As margin call and liquidation problems now affect both traditional thematic money and decentralized money (DFI) are increasingly interconnected, risk factors in global finance have become more common. The ongoing Evergrand real estate crisis is further evidence that poor decision-making from a variety of markets will affect markets that we thought were not as connected as crypto.
General confidence in global finance has waned, and with time comes an understanding of how money works. Or historically, poor policymakers’ actions have left more than 1% of the world’s adult population bankless.
However, as decentralized money became more widely accepted, more countries began to explore different currencies. Crypto, which is inherently complex, is finally moving towards the next iteration, seeing the rise of tools and infrastructure developments that are helping newcomers navigate the risks and uncertainties of a growing but emerging movement of money. It is up to the leaders in this space to help newcomers reduce their portfolio risk.
Related: Blockchain technology is widely accepted, and education is key
Democratizing finance involves reducing barriers to entry into risk management
Unfortunately, cryptocurrencies are naturally volatile. Deleting hundreds of billions of dollars in markets is still not uncommon, with market capitalization recently hitting 2 trillion. As evidenced by the recent events in the SEC crackdown and El Salvador over the past few weeks, speculation, announcements and other events can easily affect investors ’lack of confidence or confidence. The SEC forced investors to be wary of cryptocurrency volatility and fraud because regulators verify cryptocurrencies.
Even Bitcoin (BTC), despite being relatively established as a cryptocurrency, remains at the mercy of the tweets of celebrities like Elon Musk, whose activities with Tesla and tweets have lowered prices.
The market is relatively new to mainstream adoption, and cryptocurrency resources are concentrated among whales in large numbers. The big players are greatly affected by the price movements of cryptocurrencies and new investors with low investment potential are more likely to be caught unawares due to the complex nature of DFIs and cryptocurrency markets.
Related: Institutional investors will not take Bitcoin into the mainstream – you will
At this stage of the risk for whale activity, understanding how to control the level of risk is important to encourage mass adoption, especially for new investors with low capital.
Demonstrates the democratization of cryptocurrency asset access: 24 hours a day, anyone can access financial assets at the click of a button, with assets that yield higher yields than any fiat assets held by a traditional bank. The removal of bureaucracies and intermediaries has enabled greater opportunities for wealth creation, understanding of resources and tools.
But, at the moment, crypto is only reflecting the wealth gap in traditional thematic financing because those who are fluent in crypto language understand how to be strategic. Wealthy crypto holders have investment funds and brokers who have the means to provide traditional themed investment tools such as trading, securities and financing services so that their investments are always balanced against the market.
What is portfolio rearrangement?
Portfolio restructuring is the process of determining the weight of a portfolio of assets, involving the purchase or sale of assets in phases to maintain a target of asset allocation and risk. This can help investors manage the negative risks when most investors participate.
This process is important in moments of financial instability, helping individuals reduce the risk of loss and devaluation of their digital assets. Many investors, especially those under the age of 40, do not understand how to deal with the risks in their portfolio, or why they do not have the time, or why the stability of assets and rebalancing is essential for generations.
Imbalances not only prevent excessive exposure but also help build good trading habits to keep customers disciplined to stick to a long-term financial plan that allows investors তরুণ both young, old, new and experienced নিয়মিত to regularly monitor the market for losses.
Related: Variety of crypto resources versus all eggs in one basket
Most rearrangement strategies are time-based (i.e. annual, quarterly, monthly, etc.) but can also be responsive অর্থ that is, based on authorized percentage compositions of resources, which are more expensive. For example, if the original target asset allocation was 50/50 well executed between Asset A and B and Asset A, it could increase the weight of the portfolio by up to 70%.
This means that an investor can sell some of A to buy more B to return to the 50/50 original target allocation. Although there is no need to split assets, it is most effective to rearrange the portfolio with a good mix of volatile and non-volatile holdings., Because it protects investors from unwanted risks from excessive exposure.
In traditional therapeutic finance, investors are tracked through spreadsheets and bought / sold through exchanges / brokers or re-balanced in the funds that portfolio managers invest in. This process is inconvenient for retail investors and out of budget and should not be limited to those who have the time and money to carry it. There are certainly new advances in technology at TradeFi through applications that help balance traffic, analytics and automatically portfolios being used by applications like Sigfig, Personal Capital or Motley Full Advisor.
Balancing DFI can be more convenient for investors, as the process can be automated and you don’t have to constantly monitor your portfolio and constantly check the value of your assets against the stock market. People can go to work on vacation, sleep, as automated smart contracts distribute their profits across their assets while allowing the portfolio to retain net positive profits.
It is now antiquated to expect your mediator to do this for you when you start your nine-to-five work.
We have the opportunity to bring better rearrangement tools to the public through DFI
As the value of our dollars continues to fall, individuals need to be simpler, easier than ever, to protect themselves from financial risk and diversify their portfolios. Defy is the perfect opportunity to bring decentralized restructuring tools to the public by empowering consumers and investors through access to democratic assets that are not at the mercy of the central bank or the government fighting the recession, and for their financial gain and security in the future.
Decentralized money has a lot of potential. Using crypto to buy homes close to a few million dollars for millennia, claims that the privacy of crypto home ownership, because traditional theoretical savings are reduced, the world of bureaucratic money allows anyone to amass wealth through the Internet, or help accelerate financial inclusion. Especially for the bankless.
Related: The future of Stablecoin adoption and financial inclusion
But, it is usually the experts, coders, trading experts and professionals who survive the volatility of sales. It is the privilege of ordinary users, newcomers, and those who do not have the privilege of understanding the deep complexities of this place who lose the most money at this time of financial instability.
Twelve years after the first bitcoin was generated, you think we’d simplify the user experience of blockchain-based money. We’re going there, but we still have some time. Defy is still too complicated for newcomers, slowing down the pace of space. People don’t have to take courses on how to develop a decentralized trading strategy or manually balance a portfolio of multiple tokens through seemingly endless steps as well as a decentralized exchange, or trade them individually on the DEX.
Users need to be able to determine how to balance their portfolio with just a few clicks. Ideally, users can freely customize these parameters to fit their risk profile. The DFI industry is growing rapidly, and the time has come for portfolio risk management.
This article does not cite its references or sources. Each investment and trading move involves risk and readers should conduct their own research when making decisions.
The opinions, thoughts and opinions expressed herein are those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Hisham Khan Aldrin is the founder and CEO. Khan comes from a decade-long background in building and building powerful and innovative financial and enterprise technologies. With an extensive career at Bloomberg, Hisham has worked as a project director with top engineers around the world. It was here that he discovered the effects of the transformation of cryptocurrency and has since left Bloomberg to create extensive trading tools through Aldrin. Building a trader as a universal digital trading companion, its mission is to make advanced crypto trading and strategic development accessible to all.