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Crypto Gambling: Bankroll Management During The Bear

10/06/23 · Finance basics · This is not a financial advice
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While the combined crypto market cap value may have depreciated from its $1 trillion peak in November 2021, it remains a relatively impressive $842 billion.

Of course, Bitcoin (BTC) continues to dominate this space, with a total market cap of $322 billion and a total market share of 38.28% at the time of writing.

Because of this, it should come as no surprise that BTC also dominates the crypto gambling space, where customers can wager using tokens and enjoy a more transparent wagering experience. Crypto entities are inherently safe online casinos, which offer a much broader range of payment options to players.

Of course, this does create challenges in the form of bankroll management, especially given the inherently volatile nature of BTC and similar tokens. In this post, we’ll discuss how you can manage your crypto bankroll effectively and calculate your average spend.

A Look at Crypto and its Volatility

The primary issue with crypto wagering is that tokens such as BTC prices are incredibly volatile, with this borne out by the performance during the course of the last 12 months.

During this cycle, BTC’s starting price has depreciated from £37,901.68 (on December 26th, 2021) to just £13,813.78 on December 20th of 2022. This represents a decline of nearly 70% in terms of total value, which means that gamblers will have theoretically seen their bankrolls decline markedly over time.

This also shows that even dominant tokens such as BTC are subject to continued and significant volatility, creating a scenario where gamblers may see their potential winnings and losses fluctuate wildly within relatively short periods of time.

From a casino perspective, sustained price volatility in the market could affect their underlying algorithms, potentially putting them in a win or loss position once their players have cashed out.

The market’s volatility is underpinned by a number of different factors, namely the speculative nature of cryptocurrency and its status as a digital asset. This means that it lacks tangible or corporeal value, and therefore cannot be categorised as a secure or particularly stable store of wealth.

As largely speculative assets BTC and similar tokens are also vulnerable to market developments and changing conditions, with speculation capable of causing huge price shifts in real-time. Some have even argued that the wider macroeconomic climate has also impacted crypto negatively through 2022, particularly rampant inflation and the diminishing value of currencies.

An Introduction to Crypto Bankroll Management

In general terms, bankroll management describes the process of utilising available capital and deployment how and when money is staked.

In the case of crypto bankrolls, this term has a similar meaning, although it will dictate how gamblers leverage their tokens in a way the optimises returns and minimises potential losses.

Of course, there are universal rules that govern bankroll management, starting with the principle that you never wager more than you can afford to lose during a predetermined period of time. This can also serve as a de facto ‘stop loss’ measure, as it creates an automatic point at which you need to stop spending and pull back from gameplay.

To further manage your crypto bankroll, you’ll have to calculate how many betters you make per session (or while playing a particular slot or table). This is where the real challenges come to pass, as while calculating fiat currency stakes is straightforward, it’s far harder when factoring in crypto’s volatility.

Calculating Your Crypto Stakes

As it’s impossible to fully account for crypto volatility, risk management and position sizing are key to calculating individual stakes and making the most of your online gambling bankroll.

The goal of these techniques is ultimately to minimise losses rather than directly optimise returns; with aforementioned strategies such as stop losses widely used in this respect.

More specifically, establishing a rolling stop loss while crypto gambling establishes a limit position that covers all of your wagers, ensuring that you’re never out of a particular game or session due to a loss of funds.

In terms of position sizing, this caps the amount you spend on an individual wager relevant to your entire bankroll. In simple terms, you should do this by establishing a nominal betting unit that can be increased incrementally depending on the wager and implied probability in question.

This way, you can remove the emotion from gambling and take control of the factors that are within your remit, while making the most of your bankroll outside of the volatility associated with cryptocurrency.

It also means that you can increase your stake and optimise returns when wagering on short price outcomes with an optimised implied probability, while betting a smaller amount on outcomes that are higher risk but have longer odds.

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