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Market risk Meaning

The risk that an investment will lose value due to the "overall movement" of the market, rather than something specific to that one asset. It is also known as "Systematic Risk" or "Undiversifiable Risk." If the "Global Economy" enters a recession, almost all stocks and digital assets will drop.

This is market risk. You cannot avoid it by "Diversifying" within the same asset class (e.g., holding 10 different tokens won't help if the whole crypto market crashes).

Investors manage market risk through "Asset Allocation" (holding cash, gold, or bonds alongside crypto) and "Hedging" (using "Shorts" or "Options").

Understanding your "Exposure" to market risk is the most important part of "Risk Management," as it determines how much your net worth will drop during a "Bear Market."

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