Importance of diversifying our Crypto Portfolio
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Assalam-o-Alaikum Steemians !
I'm @moneyster, a professional level Cryptocurrency investor and an analyser. As usual, today I thought to share another Crypto-related experience with you. I hope this article will be considerably beneficial for all the Steemians in this community
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Diversifying our Crypto Portfolio is a very common thing in the investment and money management category. The basic idea of diversifying the Crypto Portfolio is the risk management method by dividing our investment into different assets without investing in a single asset.
We should always have a backup plan to save our funds in a great manner. Then we can use that backup plan in a critical crisis situation. The best example of this is the sudden Luna Token Crash. I even see through some news declared that about suicide cases because of that Sudden Luna token Crash. They have invested their entire capital in the Luna Token as an investment. All these things are caused due to poor asset management of our investments.
Diversifying our Crypto Portfolio is the best option to minimize our risk at a certain level in the above-mentioned situations. As an example, if we have 1000$ as our entire capital to invest in Cryptocurrencies, we can invest them in 3 different Crypto projects. It means 500$ for Bitcoin, 300$ for Ethereum and the rest 200$ for BNB. So, if the Ethereum Crashes, we don't need to worry. Because we have still some amount of funds in our BTC investment and BNB investment.
Here we have to do our own research before investing in a project. Then we can decide the exact allocation percentage according to the strength of that assets. Here I have decided to allocate 50% of my entire Crypto investment as I think Bitcoin is the most powerful and solid asset of all the Cryptocurrencies. This is the best way to minimize our risk and prevent extremely losses.
Diversifying our Crypto Portfolio is the best option to minimize our risk from unexpected situations. As we have the ability to invest in different projects, we have a higher chance to be included in a well-gained project. It means, that if we had invested only in BNB, we have to wait until BNB gets a higher gain. However, we know sometimes, that some major coin's value has increased in their own way. The most interesting thing about diversifying our Crypto Portfolio is bringing more relief to the mind.
We can use different strategies to manage and diversify our Crypto Portfolio. First of all, we should have an investment plan. For that, we can do our own research and select some best Crypto projects.
Here we can select those coins which have a limited max supply. Then, the project can't increase its Token circulation supply more than the max supply they have already allocated. I'm highlighting this option as the very famous Luna Project has increased its coin circulation from 300 million to 6000 Billion. So, we already know that if supply increases rapidly, then the demand should be decreased. In this situation, if Terra Projects needs to stay at 1$ as the value of their native Token, there should be a 6000 Billion market cap for this project. So, we know it is impossible as the Top Crypto Project - Bitcoin is only gained a 1000 Billion Market cap in the last bull run. Therefore, we can select the Best project which has mentioned a specific Maximum Supply.
Then, we can use a suitable Crypto Portfolio to Add our Transactions separately. After that, we can easily monitor the progress of our investment in detail. At the same time, we have the ability to see the assets which have profited in the present time.
I have studied the below-sourced articles to further study these topics and I have explained all the above facts in my own words and experience.
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