The Advantages Of Diverting Your Crypto Investment

in instablurt •  last month 

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The crypto market has seen some abnormalities and uncertainty over the previous few days, ranging from the UST de-pegging to the Luna coin being created excessively, lowering the price dramatically. With everything that has happened, I can only wonder what will happen to individuals who have all of their investments centered solely on the coin, and the coin has faced a significant fall. This could mean disaster for the individual. This made me realize that, given the cryptocurrency market is not only unstable but also unpredictable, one need diversify their investments by holding a variety of tokens to be secure.


What Is Crypto Diversification?


One might wonder what the term "crypto diversification" actually means. As the name implies, this is a method of dividing one's investments over multiple cryptocurrencies rather than concentrating them in one, in order to reduce the risk of losses caused by market movement and other variables. When it comes to managing your crypto portfolio, you should always remember that diversification is always preferable to "putting all your eggs in one basket."

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Diversification of cryptocurrencies is important not just for long-term investors and hodlers, but also for day to days or short term traders. Even when trading, all necessary precautions should be taken, including spreading one's trade and investments. To be clear, the value of a given asset can collapse in minutes, and if that is your only asset, your trade may be delayed because you will be waiting for it to increase in order to recoup your money. If you have other assets, though, you can scrape up while the other one heals.


Diversify To Different Blockchain & Projects


You should distribute your crypto investment as much as possible across numerous projects and blockchains while diversifying your crypto holdings. For example, you don't have to put all of your money into TRC tokens; you can also invest in BSC, ETH, and other blockchains. Consider DeFi tokens, Web3.0 tokens, and NFTs tokens as well.

A blockchain or project may have a big update or development at times, and the tokens within that blockchain or project may pumps due to this development or update. You will definitely benefit if the assets you're holding include that particular blockchain or project tokens.


Advantages Of Crypto Diversification


Spreading or disturbing your investment comes with a lot of advantages, this includes;

  • Since the crypto market is unstable and unpredictable, the price of assets can fluctuate in either way in a short period of time. If the price of one cryptocurrency falls, and that cryptocurrency is the only one you possess, it may have a negative impact on your entire portfolio. If you have other assets, though, there is a good possibility that one or more of them will perform well or at least move in the right direction. These can be used to make up for losses on the ones that aren't performing well.
  • In the crypto field, we've seen various exit scams where a project withdrew liquidity and then pulled the rug out from under investors' feet. Consider what would have happened if one of the rug-pull victims had put all of his money into that coin. He would've been heartbroken by now. This is one of the reasons why you do not have to put all of your money into a single coin.
  • You get some juicy benefits when you distribute your investment to different tokens. For example, some projects plan to develop a new token and will have to airdrop the new tokens to holders of their old tokens. If you distributed your investment and invested in their old token, you'll definitely benefit by receiving their new tokens.

When I first began my crypto journey, I only invested in one coin, XRP. When XRP ran into issues with the SEC, the price began to fall, and I was forced to sell at a significant loss. After that, I sat down and researched what to do, and it was during my study that I learned about Crypto diversification, so I began distributing and spreading my investment across various assets from various projects and blockchains.

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Screenshot Of My Portfolio On Binance & Tron Wallet

I've diversified my crypto portfolio and invested in a variety of projects; while some are currently performing poorly, the rest are doing well and can easily compensate for the loss of my failed investment. I've also invested in some of the TRC-20 tokens and I'm holding for a very long time

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