There are currently about 1,500 crypto types to choose from when building a portfolio for crypto investment. We have a choice between the old crypto currency like Bitcoin (BTC) and Litecoin (LTC), crypto in Smart Contracts platform, utility token, full anonymized crypto, and tokenized securities like Overstock's Tizzero. In order not to go wrong, we will learn how to diversify crypto trading properly in this article.
so many choices of instruments in the crypto market sometimes make investors difficult, especially newcomers in the crypto world. Thus, confusion arises in choosing a combination of assets for the investment portfolio. Overall, there are 3 ways to manage the diversification of crypto trading, so that your investment can match your risk needs and preferences as an investor.
- Use 50-60% For 2 Main Crypto It
Of course the greatest ownership in your digital asset portfolio must be dominated by at least 2 major cryptoes; you can choose from the top 10 ranking by market valuation in Coinmarketcap. Examples are Bitcoin (BTC) and Ethereum (ETH) which rank 1 and 2 in the crypto rankings by popularity and market valuation. In managing the diversification of crypto trading, these two assets must control 50% to 60% of the portion of your crypto portfolio.
Bitcoin (BTC) and Ethereum (ETH) are the 2 largest cryptoes based on market capitalization. Both have established themselves as 2 of the most valuable digital assets on the market to date. That is why these two crypto receive most of the inflows of new investors in the digital asset market. Moreover, various predictions made by professional analysts said that both trends will continue to rise in 2018.
In addition, compared to Altcoin with smaller market capitalization, BTC and ETH have lower and stable volatility. Thus, you can minimize risks in the crypto asset portfolio.
Today many newcomers in the crypto investment space are eager to find the next "Bitcoin". This can be seen from the continuous incessant Altcoin. From this phenomenon, many also want to get instant investment growth, with Altcoin choosing randomly picked when diversifying into crypto trading. They do not care about the functions and benefits provided by the instrument.
In fact, Bitcoin and Ethereum are still great players in the last 12 months, and have a very good position to this day. Bitcoin (BTC) is known as a pioneer for Blockchain technology, so its value will still continue to grow along with the growth of adoption of Blockchain technology in mainstream.
The same is true for Ethereum (ETH). The ETH platform has received much appeal from both the public and private sectors and is the most popular emerging technology. You can see in Coinmarket that 18 of the top 20 tokens use the ERC20 technology initiated by Blockchain Ethereum. Therefore, in addition to Bitcoin, Ethereum must be an integral part of your crypto trading diversification process.
While division of Bitcoin and Ethereum share ownership must be in accordance with your belief and risk preference. Generally, Bitcoin weighs more than Ethereum.
- Portions 30% Up To 40% For Critical Middle Crypto
Furthermore, your Digital Asset Investment portfolio diversification will be shared with the most promising Altcoins ownership of the top 25 cryptoes, ranked by 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 should be used for this Altcoins.
Top 25 Altcoins has proven itself as a crypt with a potentially bright future. But in diversifying crypto trading, it should be careful, because this group has a higher volatility than Bitcoin and Ethereum.
Why choose crypto-crypto in the top 25 ranks? Crypto-crypto is what will be often glanced financial institutions and Hedge Fund Manager as an instrument with high ROI, rather than other investment instruments such as Forex, Stocks, Stock Exchange, and Bitcoin. Altcoins are generally considered to be less mature and still on their way to reach the top of their goals. Thus, the maximum potential has not been met and can still be utilized to take advantage of the buying strategy at low prices.
- Leave 10% For Token ICO and Altcoins Minor
After making room for the main crypto and the promising Altcoins in diversified crypto trading, you can dedicate a small portion of the portfolio (about 10%) to the recently published ICO token. With a note, you've already studied the ins and outs of the ICO token, both functionality, benefits, and risks. Thus, you can be sure that the token has a high potential to successfully attract the attention of the market.
Crypto from ICO tokens is highly volatile and very risky. However, they also have the potential to rise several thousand percent in just a few months. Examples of crypto from ICO tokens that have produced great growth are TaaS (TAAS), Iconomy (ICN), TenX (PAY), Gnosis (GNO), and many others.
A study by Deloitte revealed, "Only 8% of Blockchain projects are launched in GitHub that are still active and running to date". The percentage of these studies clearly shows the risk of purchasing digital tokens from the recently launched Blockchain project. Moreover, nowadays there are so many scam impersonate ICO that can take all your investment fund run. Investigate a calibaration, this is what until now still causes most of the ICO to fail. Therefore, this type of crypto exposure should be completely restricted to the 10% level in your crypto trading diversification.
Crypto Trading Diversification Has No Weight Rigid Considerations
The exact weight of the percentage of your crypto asset is actually flexible. The above portion is just a suggestion that you can consider when planning to diversify into crypto trading. Thus, you can get ideal measurements to exploit potential across all types of crypto currency, whether it's the main currencies like Bitcoin and Ethereum, Altcoins Utama, or a new token.
Regardless of the rules later, always prioritize the consideration that is focused on how much your risk tolerance as an investor. Do not do the crypto trading diversified whose risk is greater than your capital capability. However, crypto assets have high volatility and large movement flows. The dynamics also tend to be sensitive to market news, especially those related to government regulation of countries in the world.
If you can handle a 30% to 50% portfolio fluctuation in a week, then you can increase Altcoins ownership. If you choose a portfolio whose concept focuses on risk protection, then the percentage of Bitcoin and Ethereum holdings must be greater than Altcoins and Tokens.