What are the biggest risks associated with crypto trading?

Crypto trading carries several significant risks. Volatility is the primary concern—Bitcoin and other cryptocurrencies can swing 10-20% in a single day, potentially wiping out profits or capital. Liquidation risk occurs when using leverage (borrowed money), where sudden price moves force automatic position closures at losses. Exchange hacks and technical failures can result in lost funds, as crypto exchanges aren't federally insured like banks. Market manipulation and low liquidity on smaller exchanges can cause slippage, where executed prices differ from expected prices. Additionally, emotional trading—buying peaks or panic-selling lows—damages returns. Finally, regulatory changes can trigger market crashes, and new traders often lack proper risk management strategies, risking more than they can afford to lose.