Capital Risk

Definition ∞ Capital Risk refers to the potential for an investor to lose some or all of their initial investment in a digital asset or related venture. This exposure arises from various factors, including market volatility, technological vulnerabilities, regulatory changes, or project-specific failures. Capital risk represents the possibility of permanent impairment to invested funds. It is a fundamental consideration for any participant in the digital asset markets.
Context ∞ Capital risk is a recurring theme in cryptocurrency news, particularly during market downturns or when discussing the inherent volatility of digital assets. Regulatory bodies frequently issue warnings regarding the substantial capital risk associated with crypto investments. Reports on security breaches, project liquidations, or significant price corrections consistently underscore the importance of understanding and managing this financial exposure for investors.