Wrong-Way Risk occurs when the value of an investment moves in the opposite direction than expected, leading to potential losses. In cryptocurrency, this can happen when an investor takes a position based on predictions that do not materialize.For instance, if a trader believes a specific cryptocurrency will rise in value and invests accordingly, but instead, the market crashes, they experience a loss. This situation is exacerbated by the volatility often seen in the crypto market, where prices can swing dramatically in a short time.Additionally, Wrong-Way Risk can affect leveraged trading. If an investor uses borrowed funds to maximize potential gains and the market moves against them, the losses can be magnified, leading to liquidation of their position. The unpredictable nature of the market means that investors can be caught off guard by sudden changes. Mitigating this risk involves thorough research, cautious investment strategies, and maintaining a balanced portfolio to help buffer against adverse market movements.