Understanding the Mindset
The objective of every investor is to maximize profits and minimize risks. A very common and effective strategy to fulfill this objective is diversification of your portfolio by investing in a range of assets. The whole idea is to invest a varying percentage of your capital in multiple assets such that a plunge in prices does not excessively diminish your overall profitability.
Cryptocurrencies are one of the most volatile classes of investments. Despite the current complexity of understanding the movements of the prices, the principle of "high risk, high rewards" holds in this asset class too.
This volatility can lead to increased profitability, but it can also multiply the possibility of incurring losses. Historically, it has been common for the price of a cryptocurrency to fall by a large percentage in a matter of days. In such cases, investors who have concentrated investments in that cryptocurrency would see large losses in their portfolios.
To mitigate such levels of risk exposure, it is only financially smart to spread your funds across a range of crypto-asset themes because a great man once said "Don't put all your eggs in one basket". In the long run, the combined performance of assets in a well-diversified portfolio may offset losses incurred by certain individual assets.
Many investors think Bitcoin consists of everything that cryptocurrency and blockchain technology has to offer. Thus, instead of adopting a crypto diversification strategy, they allocate all their capital to Bitcoin.
Although Bitcoin has recorded impressive returns over the years, nothing beats a balanced portfolio that takes advantage of the various technologies and utilities offered by blockchain. For example, investors that had diversified their crypto portfolios recorded greater gains compared to those holding concentrated amounts in Bitcoin during the DeFi boom of 2020.
There are a variety of themes developing in the cryptocurrency market, with each theme offering its own unique promise. Here are some of the interesting themes in the crypto industry that you can look into for diversifying your portfolio.
Crypto asset themes:
So, what next? With so many options to choose from, and with the high-risk profile of each cryptocurrency, it can be a little tricky to find the perfect basket for yourself. If you are betting your money, then it is probably better you buy a lottery ticket. But if you are one of the serious ones, we have something that will change the way you invest in crypto.
Introducing: Crypto Smartlife
Crypto Smartlife is founded by a group of crypto enthusiasts located across Singapore, and India with leading industry experience working for Fortune 100 companies in areas of Blockchain, Artificial Intelligence, and Capital Markets.
Crypto Smartlife's mission is to harness the power of their website, an Artificial Intelligence-powered Crypto Thematic Basket Investment platform, to drive the next 50 million users into crypto by making crypto investing Smart, Easy and Simple.
Automating your crypto investment is not the only best part, in addition to that, you also get Rs.250 worth Bitcoin bonus on signing up.