Price Exposure refers to the susceptibility of an investment or portfolio to changes in the market price of a specific crypto asset. It quantifies the potential financial impact, positive or negative, that fluctuations in an asset’s valuation can have on an investor’s holdings.
Mechanism
The mechanism for Price Exposure is directly linked to the ownership or contractual rights to an asset whose value is determined by market forces. As the market price of the asset moves, the corresponding value of the investor’s position changes proportionally. This can be direct, through spot holdings, or indirect, through derivatives.
Methodology
The methodology for managing Price Exposure involves risk assessment and hedging strategies. Investors utilize tools such as stop-loss orders, options contracts, or diversification across various asset classes to mitigate downside risk. Continuous monitoring of market volatility and asset correlation is critical for effective exposure management.
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