Cryptocurrency – The Future of Investment and Trading
When it comes to investment and trading, cryptocurrency is undoubtedly a desirable option. Compared to several asset investments such as shares and stocks, cryptocurrency has an effectively proven track record of producing and bringing about many successful investors. This has led to several investors adding crypto coins such as Bitcoins and Ripple with BTC and XRP as their respective tokens.
What It Means to Have a Diversified Crypto Portfolio
With several companies having introduced their cryptocurrency and many others in the process of or have recently introduced their blockchain based crypto coin, investors are looking into multiple options for investments rather than purchasing a single company’s cryptocurrency.
This is purely based on a strategic investment plan in conjunction with the overall capital invested by each individual. This helps investors widen their margin and increases their chances of raking in more profits, considering the frequent fluctuation in cryptocurrency market pricing. Investors do need to analyse which is the best cryptocurrency for them. This is essentially coined as crypto portfolio diversification.
Factors that Determine a Diversified Crypto Portfolio
Like the stock market and share market, the cryptocurrency market also witnesses price fluctuations that are determined or rather valued and in-demand based on several factors. Market trends, brand value recognition, time, and geography are the most commonly affecting reasons.
Considering all these aspects and more, investors need to carefully research and analyse the highs and lows, the purpose of investment, the value of a particular crypto coin, etc., all fall in place in terms of having a diversified crypto portfolio. This allows investors to lower the risk of incurring heavy losses whilst accruing fair returns on their investment, even when some companies can go down in cryptocurrency value.
Things To Keep in Mind When Diversifying Your Crypto Portfolio
Now that you are aware of how cryptocurrencies essentially work and what determines their price value, here are a few key pointers to keep in mind before investing in multiple cryptocurrencies and, in turn, expand your crypto portfolio:
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Different Types of Cryptocurrencies
While most cryptocurrencies are block-chain-based and follow a peer-to-peer mode of transaction, a few still rely on intermediaries such as banks and other payment gateway portals via third-party apps that create crypto accounts and allow users to invest in and purchase several types of cryptocurrencies.
This can hugely impact the value of the company and its respective crypto coin price. For example, the dogecoin to INR is around 6.21 rupees, whereas the most sought out, popular and expensive crypto coin, Bitcoin, with its token BTC, is valued at over 23 lakhs in INR.
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Industrial Diversification
When investing in cryptocurrencies or even money, for that matter, it is only ideal to be aware of the business where you are going to be investing in. Following the right company is the right choice for investment. These are determined based on extensive research on the field of your choice wherein you may wish to invest in or the company itself that is doing well in the industry.
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Time-Based Diversification
Time is always of the essence. That said, the price value of cryptocurrencies can be exponentially predicted and calculated based on extensive time-tested research. Knowing when to be cautious about when the price fluctuates and when it drops or increases based on an algorithmic and mathematical approach helps ascertain a near accurate prediction for when you may want to buy or sell crypto coins.
In conclusion, having a mix of crypto coins as part of a diversified portfolio helps you become a better investor and rake in more profits. By ideally investing your capital in conjunction with calculated risks, strategic planning, and an eye for thorough research and analysis, one can easily become a potential investor in the cryptocurrency industry!
