Too many choices of instruments on the crypto market sometimes make investors difficult, especially newcomers to the crypto world. So, there is a sense of confusion in choosing an asset combination for an investment portfolio. how to diversify portfolio crypto, so that your investment can match your needs and risk preferences as an investor?
Below will be explained how to diversify the crypto portfolio
Use 50-60% for 2 main crypto
Of course, the biggest ownership in your digital asset portfolio must be dominated by at least 2 main cryptos; you can choose from the 10 biggest rankings according to the market valuation at Coinmarketcap. Examples are Bitcoin (BTC) and Ripple (XRP) which ranks 1 and 2 in crypto ranking according to popularity and market valuation. In managing the diversification of crypto trading, these two assets must control 50% to 60% of your crypto portfolio.
Bitcoin (BTC) and Ripple (XRP) are the 2 biggest cryptos based on market capitalization. Both have established themselves as the 2 most valuable digital assets on the market to date. That is why both cryptos receive most of the inflow of new investors in the digital asset market. Moreover, various predictions made by professional analysts say that the trend of both will continue to rise ahead.
In addition, compared to Altcoin with smaller market capitalization, BTC and XRP have lower and more stable volatility. So, you can minimize risk in the crypto asset portfolio.
Today many newcomers to the crypto investment room are eager to find “the next Bitcoin”. This can be seen from the incessant Altcoin that continues to emerge. From this phenomenon, many also want to get investment growth instantly, by gambling on Altcoin randomly when diversifying crypto trading. They do not care about the functions and benefits provided by the instrument.
Use 30% to 40% portion for Intermediate Ranking Crypto
Furthermore, the diversification of your Digital Asset Investment Portfolio will be shared with the most promising ownership of Altcoins from the top 25 cryptos, which are ranked based on their popularity and market share. You can choose from Ripple (XRP), Litecoin (LTC), Dash (DASH), NEM (XEM), IOTA (MIOTA) and others. About 30% to 40% in your investment portfolio must be used for these Altcoins.
Top 25 Altcoins have succeeded in proving themselves as crypto with a potentially bright future. But in diversifying crypto trading, you should still be careful, because this group has a higher volatility than Bitcoin and Ethereum.
Why choose crypto in the top 25 ranks? Because, these cryptos will often be looked at by financial institutions and Hedge Fund Managers as instruments with high ROI, rather than other investment instruments such as Forex, Stocks, Stock Exchanges, and Bitcoin. Altcoins are generally considered to be still undercooked and are still on their way to reaching the top of their destination. Thus, the maximum potential has not been fulfilled and can still be used to take advantage of the buying strategy at low prices.
Left 10% for ICO Tokens and Altcoins Minor
After making space for the main crypto and Altcoins that promise in diversifying crypto trading, you can dedicate a small portion of the portfolio (around 10%) to the ICO tokens that have just been published. With a note, you have learned the ins and outs of ICO tokens, both functions, benefits, and risks. Thus, you can be sure that the token has high potential to successfully attract market attention.
Crypto originating from ICO tokens is very volatile and very risky. However, they also have the potential to rise by several thousand percents in just a few months.
Examples of crypto from ICO tokens that have produced large growth are TaaS (TAAS), Economy (ICN), TenX (PAY), Gnosis (GNO)
Crypto Trading Diversification Doesn’t Have the Weight of Rigid Considerations.
The exact weight of the percentage of your crypto assets is actually flexible. The portion above is only a suggestion that you can consider when planning to diversify crypto trading. Thus, you can get ideal measurements to exploit the potential of all types of cryptocurrencies, whether it’s major currencies such as Bitcoin and Ethereum, Altcoins Main, or new tokens.
Whatever the rules will be, always prioritize considerations that are focused on how much your risk tolerance is as an investor. Do not verify crypto trading, the risk is greater than your capital capacity. However, crypto assets have high volatility and a large flow of movement. The dynamics also tend to be sensitive to market news, especially those related to government regulation in the world.
If you can handle fluctuations in portfolio values of 30% to 50% in a week,
you can increase ownership of Altcoins. If you choose a portfolio whose concept focuses on risk protection, then the percentage of ownership of Bitcoin and Ethereum must be greater than Altcoins and Tokens.
When you create your cryptocurrency trading portfolio, you may find other tactics that you can also incorporate into your trading strategy. In addition, you will most likely end up trying out the better advice.
But that is part of the process to become a cryptocurrency trader.trial and error is needed for investors