Tips to diversify your portfolio in crypto-currencies

The market of virtual currencies is highly volatile and investing blindly and the best way to lose your capital in a few hours. Rule number 1 for investing in crypto-currencies is the following : do not put all your eggs in the same basket ! As is the case for the finance of traditional, diversification helps reduce the risks and build a portfolio that is profitable and sustainable. Here are our tips.

  • Determine your needs
  • Before you invest in other crypto-currencies, it is necessary to know if you really need to diversify your portfolio. In fact, if your budget is only 100 euros the diversification will be useless, because of the increases in value low, it is not wise to dilute a small amount between multiple crypto-currencies. We recommend that you diversify for a capital of less than 500 euros.

  • Review the market
  • In the words of the very famous Warren Buffet never invest in a project that you don’t understand. This is true for traditional investments, and even more relevant for crypto-currencies ! Ignore the white papers too enticing to be honest and be interested in the news and absorb the most information possible on the market in order to identify sound projects.

  • Choose the ratio of your portfolio
  • Most of the portfolios are distributed in the following manner : a low risk category, a risk category to the medium-and high-risk. If the investment in each of these categories may vary, the percentages are generally 50% / 30% / 20%

    – the assets less risky (Bitcoin)

    It is advisable to invest 50% of your capital in the most secure assets, and buy Bitcoins (refer to list of for example). If associate Bitcoin to a category of “safe” may seem surprising, yet it is the crypto-currency, the more robust the market, which benefits from a certain degree of legitimacy. The Bitcoin acts as a standard on the market and can be traded on all platforms. It is also a benchmark, to know that the other virtual currencies are not traded in euros or dollars, but in Bitcoins.

    – the assets-to-moderate risk (Bitcoin to Cash or Litecoin)

    It is time for you to look at the assets a little more risky ! We advise you to turn to crypto-currencies already widespread and with a larger cap for 30% of your portfolio. One thinks in particular of the Bitcoin Cash and Litecoin, which are considered as alternatives to Bitcoin. In the case where the Bitcoin loses its value, you will reduce your exposure.

    – the assets of high risk (Ripple)

    Think of the assets that are installed permanently in the sector, but whose future is always an unknown. The Ripple falls into this category, because of its capitalization is very important associated with agreements with all the major banks. The alternatives to the Ethereum can also help to reduce the dependence of your portfolio to this virtual currency : the NEO, Ethereum Class and Cardano represent interesting solutions.