Bitcoin investing doesn’t have to be “too risky” says Ari Paul

02 May, 2019 | Updated: 02 May, 2019
by Will Heasman
Bitcoin investing doesn’t have to be “too risky” says Ari Paul

Risk and cryptocurrencies are often seen as synonymous with one another, with prospective new investors citing volatility as a reason for avoiding jumping in. But does it have to be a constant barrier for entry? or is this perceived “risk” something we can control; according to Ari Paul, CIO of BlockTower Capital, the risk is mostly in our minds…

In a Tweetstorm off the back of the Tether-Bitfiniex fiasco, Paul addressed some of the recently aired concerns from the community regarding financial risk.

Paul started by conveying how an investor can “intelligently” separate risk and return within an investment context, adding that there is no such thing as “too risky,” as you can control the risk by the size of the investment.

He then gave the following example, hypothesizing upon two assets, the first being riskier but with a higher reward, and the second being less risky but with a lower return:

The idea is that an investor doesn’t need to put as much capital into a high-risk high reward asset, therefore reducing the risk of losing such capital significantly, while increasing the potential of a good return.

Paul then continues to equate hypothesizes this to Bitcoin Vs stocks:

once again Paul turns back to the idea of ‘sizing’ relaying that no risk is too great depending on the size of the investment in comparison to the capital on hand:

Paul then Echo the sentiment of many other crypto propagators who recommend a minimum 1% stake in Bitcoin:

Controlling risk by only investing a small amount of what you can afford to lose is fairly prudent advice. For example, for someone with a net worth of $10000 - which according to CNN Money is the average net worth for 25-34 year-olds – 1% would equate to around $100, an investment of this size back in, lets say arbitrarily 2012, would have provided an annualized return of 253%, and a grand total of $169,990. Not bad for a 1% punt...

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