Investors have a number of options at their disposal to generate more during periods of low volatility, including simply lending their tokens out via decentralized finance protocols or through centralized exchanges. Other alternatives include staking and advanced strategies using derivatives like options and futures.
Ahmed Ismail, CEO and founder of crypto liquidity aggregator Fluid, told Cointelegraph that during these periods, “While it can be tempting to look for familiar patterns, it’s important to remember that market conditions are always in flux and can not be relied upon to replicate.” Tools like stop orders may lose their effectiveness during these periods, Sarwate said, while liquidity shortages “can risk leaving some actions unfulfilled.
Speaking to Cointelegraph, a spokesperson for leading stablecoin issuer Tether said that during periods of tight price action, risk management can “involve diversification across different assets, employing stop-loss orders and monitoring market indicators for potential shifts.” “Traders will often have a unique combination of metrics, or a specific trend they monitor that signals to them when something’s moving in the water. However, any such hunches should be rigorously investigated and ideally cross-referenced as much as possible to ensure their validity before committing to a course of action.”
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