The best way to expand your crypto portfolio
- 1 mins
The success or downfall of your crypto investment may depend on your diversification strategy. Portfolio diversification is an art you need to master before putting your capital at risk.
What’s crypto portfolio diversification?
Crypto portfolio diversification is just putting your money into different crypto assets to reduce the risk if one or more projects perform poorly.
If you are a small-scale investor, you might be better off investing in two or three crypto coins. But, if you’re trying to create a sizable portfolio, two to three coins won’t cut it.
How to get started?
There are several ways to diversify your portfolio. You have to look at your portfolio from different perspectives.
With that in mind, below, let’s discuss some of the several methods of crypto portfolio diversification you can consider.
Type of cryptocurrency
The idea here is to choose different types of well-performing cryptocurrencies and invest in them. You can pick what coin to invest in based on the basis and technology powering the project.
Do not forget to research different aspects such as price, past trends, and future potential of each cryptocurrency.
Simply put, you choose to invest in crypto projects from different parts of the world. Depending on your preference and risk tolerance, you can mix American, European, or even Asian blockchain projects to have a more geographically balanced portfolio.
Rather than buying your portfolio all at once, you instead buy parts of it at intervals. You can decide to buy 10% of your portfolio every month. In this case, it will take you ten months to assemble a complete crypto portfolio.
To get the most out of this strategy, set price alerts on the crypto coins/projects of interest.
The use cases
For instance, Bitcoin is a virtual currency, Ripple facilitates payment transfers in financial institutions like banks.
Ethereum, on the other hand, powers DeFi protocols and smart contract technology.
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