If you invest in cryptocurrencies, you certainly have your preferences. You have a preference for Bitcoin, Cardano, or Ethereum. Nevertheless, we will give you in this article some basic rules to secure your investments. And that means diversifying your crypto wallet !
Why should you diversify your crypto portfolio?
When it comes toinvest in cryptocurrencies, one of the most important things you can do is diversify your portfolio. By investing in a variety of different cryptocurrencies, you can minimize your risk and maximize your profit potential. We recommend that you never stake more than 10% of your portfolio on a single cryptocurrency. To diversify your crypto portfolio, you should ideally hold at least 20 different cryptocurrencies.
Investing in multiple cryptocurrencies also allows you to hedge against market volatility. If the value of one cryptocurrency goes down, you can always profit from another that goes up. Also be sure to avoid betting on cryptocurrencies that are all based on the same ecosystem. For example, a crypto like Avalanche recently launched Avalanche Bridge to foster a full interoperability with Ethereum. Therefore, in case of fall of ETHAvalanche will be largely impacted.
Invest in what you understand
It’s good to diversify your crypto portfolio. Still have to do it well. Indeed, far too many people view cryptocurrencies as gambling. However, this is not the case at all, it is a financial investment. We recommend that you only invest in cryptocurrencies whose principles you understand. warren buffet said that one invests correctly only when one buys for oneself (and not in a logic of resale).
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Last piece of advice in this article: only invest the money you don’t need. You will be calmer in case of fall of cryptocurrencies. And always keep a cash reserve, it can be useful for averaging down.
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