The market for virtual currencies is very volatile and blindly invest and the best way to lose your capital in a few hours. The number one rule for investing in cryptocurrencies is this: do not put all your eggs in one basket! As is the case for traditional finance, diversification helps to limit risks and build a profitable and sustainable portfolio. Here are our tips.
Determine your needs
Before investing in other cryptocurrencies it is necessary to know if you really need to diversify your portfolio. Indeed if your budget is only 100 euros diversification will be useless: because of low value increases, it is not wise to dilute such a small amount between several cryptocurrencies. We advise you to opt for diversification for a capital of at least 500 euros
É tudiez market
As the famous Warren Buffet says, never invest in a project you do not understand. This is true for traditional investments, and even more relevant for crypto-currencies! Ignore white papers that are too enticing to be honest and interest yourself in the news and absorb as much information as you can about the market to identify solid projects.
Choose the ratio of your portfolio
Most portfolios are distributed as follows: a low-risk category, a medium-risk category and a high-risk category. While the investment in each of these categories may vary, the percentages are usually 50% / 30% / 20%
– Less risky assets (Bitcoin)
It is advisable to invest 50% of your capital in the safest assets, and therefore to buy Bitcoins (see list of buybitcoin.info for example). If to associate Bitcoin with a “safe” category may seem surprising, it is nevertheless the most robust cryptocurrency on the market, which enjoys a certain legitimacy. Bitcoin is the standard on the market and can be traded across all platforms. It is also a benchmark, namely that other virtual currencies are not listed in euros or dollars but in Bitcoins.
– Moderate risk assets (Bitcoin Cash or Litecoin)
It’s time to take a look at some riskier assets! We advise you to turn to crypto-currencies already widespread and with the largest capitalisations for 30% of your portfolio. We think in particular of Bitcoin Cash and Litecoin which are considered as alternatives to Bitcoin. In case Bitcoin loses its value, you will reduce your exposure.
– High risk assets (Ripple)
We are thinking here of assets that are permanently installed in the sector but whose future is still unknown. The Ripple falls into this category, because of its very large capitalization associated with agreements with the big banks. Alternatives to Ethereum can also help reduce the dependence of your wallet on this virtual currency: NEO, Ethereum Class and Cardano represent interesting solutions.