How To Build a Great Crypto Portfolio
There are enough coins and tokens in the cryptocurrency market waiting for you to invest in them. So, if you are looking for an investment opportunity, it may be a good idea to consider investing in this market. If you are not sure of the assets you want in your portfolio, then it is good to choose less risky investments that can give you returns in the long term. Today, we are going to look at the cryptocurrency market with data from the past and guide you to build your portfolio.
Cryptocurrency in Your Portfolio
Cryptocurrencies represent a new asset class that gives high returns but can also be highly risky. This market is growing as it is being adopted worldwide and is worth considering as an asset in your portfolio because it has a bright future.
When starting, consider a crypto allocation of up to 2% of your portfolio and slowly increase this allocation as time goes by. To counterbalance cryptocurrencies, invest in gold, fixed deposits, cash, and realty. Only invest money you are willing to lose in the cryptocurrency market. Minimizing very risky assets will protect you against volatility.
Bitcoin Is a Great Investment
As a beginner in the cryptocurrency market, learn as much as you can about the crypto market so that you can decide the percentage you will allocate to cryptocurrencies. Bitcoin has a 43% share in the cryptocurrency market and is the largest cryptocurrency in terms of market capitalization. Because of this, the price actions of Bitcoin heavily influence the market direction of the cryptocurrency market.
As a beginner in the crypto market, it is good to allocate at least a 60% share to Bitcoin followed by Ethereum which is number 2 in terms of market capitalization. A 75% Bitcoin and 25% Ethereum allocation is the best for risk-adjusted returns.
Once you learn about the top 2 cryptocurrencies, it will be easy for you to invest in the other 20 coins. You can learn about these coins by checking online, especially at coinmarketcap.com. As time goes by and your investor confidence grows, you can go beyond the top 20 cryptocurrencies and invest in those with 10 times or 20 times potential (although these have the highest risk in the market. Using software such as Bitcode can be a big help as it utilizes the best AI to help you make money – you can see reviews of Bitcode here.
Most of the Altcoins Do Not Survive a Cycle
An event, known as halving, causes the cryptocurrency market to move in a 4-year cycle. This cycle has both periods of intense growth (bull market) and periods of accumulation (bear market). It is difficult to predict when and how the market will move. As such, our strategy should accommodate these two periods.
Bitcoin often holds its ground throughout this 4-year cycle. Altcoins, coins with the exception of Bitcoin and Ethereum, grow disproportionally when the market is bullish and their value deflates quickly. In addition, most of the top altcoins can go bust all of a sudden without warning.
That is why it is good to fully understand the risks when investing in cryptocurrencies you don’t know much about regardless of how attractive their returns may look. If you look at the top 15 crypto list from 2017, you will realize that most of these cryptocurrencies are no longer part of the list of top 100 cryptocurrencies. In the next 5 years, Bitcoin and Ethereum will still be the best cryptocurrencies meaning that it is a good idea to invest in them.
It Is Never Too Late to Start Investing in the Cryptocurrency Market
If you have been on the fence about investing in the cryptocurrency market, then now is the best time to start investing. It is estimated that there are about 120 million investors in this market and this number is expected to grow 10 times in the next five years. This means that the overall market will grow in the long term. So, the best time to start trading is today. It is never too late to invest in this market.
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