How to protect yourself from falling crypto prices

The volatility of crypto has been a cause of concern over the past few months. As some may remember, Bitcoin’s price peaked at $20,000 USD in December 2017 but as of this writing, it has lost over 50% of its value. All the other cryptocurrencies have followed suit.

What causes volatility?


Volatility is chiefly caused by a lack of liquidity of an asset and well as the backing of that asset. For example the US dollar is backed by the US economy and the US government and because of the strength of the US economy it creates liquidity of the US dollar because people and countries all across the world accept the US dollar as a store of value and a form of payment because they respect the strength of the US economy. This creates a network effect unlike some developing countries that have shaky economies and governments which creates volatility for their currencies.

The main cause of volatility in Bitcoin and other cryptos is that they are generally backed by nothing. They don’t have strong companies or assets backing them and this creates an environment where they are very easy to buy but hard to sell especially when their value is falling like they are doing now, this creates huge speculation in the crypto markets. 
Stocks in the stock market can almost always be sold even if their prices fall because there are always buyers willing to buy and hold waiting for the stock price to rise but cryptos don’t have the same liquidity.

GN Compass solves crypto volatility

GN Compass, is a peer-to-peer lending platform for Cryptocurrency-Backed Loans ™. GN Compass’ token GNCT is backed by a $140 million collateral bond. This bond helps to protect the token and the company. This is the first token ever that has this backing. This bond also helps to protect the GNCT against price volatility and keeps the price very stable.

Our projections are that with this bond in place, the price of the GNCT will rise to about $100 USD in about a year. We use the collateral backed GNCT to back our loans on the GN Compass platform, so our lenders are protected. Loans on the platform can also be bought and sold using GNCT only and on our in-house GN Compass loan exchange marketplace.

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