How to diversify your cryptocurrency portfolio

When it comes to making investments in digital currency, it is essential to find the perfect balance in your crypto portfolio, as this will help maximize the potential return on investment while minimizing potential losses. This is often accomplished by diversifying one's portfolio, as investing in multiple digital currencies increases the chances of hitting the jackpot with one of them, while reducing the amount you risk losing when a currency drops significantly in value.

When to diversify your portfolio?
For starters, before making a crypto investment, it's important to determine if you really need to diversify your portfolio. The best way to judge this is to consider your budget. If, for example, your capital is $ 200, diversifying your portfolio is not worth it. Diluting a relatively small amount of capital between different currencies is not a good choice, as increases in value will probably not be large enough to make the investment worthwhile. Analysts believe that diversification should begin with an investment of at least $ 500. However, more is always better because it will lead to higher profits as a result of price increases.

Now, if you are ready to invest a larger amount of capital in digital currency, you will find that most diversified portfolios are divided into three different categories:

The low risk category (often cryptos like Bitcoin or Ethereum)
The medium risk category (often altcoins with a large market capitalization)
The high-risk category (often ICOs and low-popularity altcoins that caught your eye)

Investment in each of these categories will vary, with the highest investment in the first category representing the lowest risk, a medium investment in the second category and the smallest investment in the third category. Investment percentages may vary, but most who choose this system are targeting 50% / 30% / 20% or 60% / 30% / 10%.

Keep in mind that investing in crypto often requires consistent work and diversification. Even if it was initially profitable, an investment made a few months ago may not produce any return today. As a result, for sustainable profitability, crypto portfolios often require adjustments, sales and new investments.