SEC S17-W4 || Crypto Assets Diversification.

Hello everyone, How are you doing, I welcome you again to my blog in the SteemitCryptoAcademy.

Today, I will be joining the Crypto Academy contest on the topic Crypto Assets Diversification, where we shall be discussing the importance of diversification, how crypto enthusiasts can diversify their assets, and also discuss with you the analysis I used before diversifying my assets.

^{Image Edited Using canva}

---

• Introduction

---

Diversification is an important factor to consider in any type of investment, most especially in the world of cryptocurrencies, it is a process of spreading assets across different projects or different crypto initiatives.

As the cryptocurrency market develops and evolves day by day, investors are also looking for ways to diversify their portfolios, as diversification is important for us in order to reduce risk and maximize profits, Of course, everybody wants to make more money.!.

Freepik

So, therefore, everyone out there is always looking for potential assets to put their money in and watch it make the move for it, so the concept of diversification simply means spreading your income or earnings into other potential assets to earn more profit and reduce the threat on a single entity.

---

What are the main reasons why crypto asset diversification is important in an investment portfolio?

---

Diversification is necessary in a cryptocurrency portfolio for different reasons;

Firstly,

Risk Management - Diversification can be referred to as another means of managing risk in the crypto business, as it helps spread risk across multiple assets, reducing the impact of a possible downtrend in a single investment.

Secondly, it allows investors to capitalize on different market trends and opportunities, therefore improving total their returns.

Lastly, because cryptocurrencies are seen as a store of value, diversification can help us to serve as a hedge against inflation and currency depreciation.

---

Can you explain how you diversified your crypto assets in your personal portfolio? What strategies have you used to maximize diversification while minimizing risk?

---

For my diversification analysis, I normally start off by putting a big part of my capital into some major cryptocurrencies such as Bitcoin and USDT, This is because these assets are mostly stable and can also serve me as liquidity in any case that I need gas fee or any interesting amount of money without taking much loss.

Next, I also diversified my assets into some promising altcoins with solid foundations and growth potential(I am currently holding DEGEN, ALGO DOGE, and a few more).

Freepik

I fully researched each project, taking into account the team behind them, the technology, the utility, and community support, this method allowed me to invest in projects with a variety of applications and market ideas, reducing the risk associated with what I will face in a single cryptocurrency portfolio.

Finally, I normally used a dollar-cost averaging approach, which means Instead of investing all at once, I spread my investments over some time, this strategy over the years has helped me avoid the traps of trying to time the market at once and also the impact of short-term price fluctuations, and in any case that the price went above my timing, then I move on to the next one instead of chasing it.

---

How can diversifying crypto assets help mitigate market volatility? Can you give concrete examples of situations where diversification has had a positive impact on your portfolio?

---

Diversifying crypto assets is a method for reducing market volatility by spreading risk across many assets, or to DCA in order to accumulate more at a lower price.

For instance, now, I've diversified my $ DEGEN portfolio by buying $DEGEN at different entry points according to my analysis.

TradingView

My first entry - As you can see, I made my first entry of $0.03 when I noticed that $DEGEN made a double bottom with the hope that we get to make a massive movement which indeed got to $0.046

My Second Entry - I DCA'd into my second entry at a lower price of $DEGEN than my first entry, I got in the second time at $0.02, when my analysis made the same form as I saw the double bottom once more and also at the support level.

My Third Entry - This is my current entry where I again DCA at $0.018, as there is a lot of positive movement I'm expecting from this entry, and I plan to DCA once more in any case the market retraces below the current entry.

TradingView

This technicality allows me to limit my exposure to price swings and potential losses related to a single asset.

During market downtrends, such as the recent downtrend in the crypto market which also dropped the price of $DEGEN's price to $0.018, diversification helped me reduce the impact on my entire portfolio value.

Although the price of $DEGEN fell, the diversification of my portfolio kept me from being too exposed to the price movement of a single entry, Instead, the other entries helped to balance my portfolio's overall performance.

---

---

How does the STEEM token fit into your crypto asset diversification strategy? What is its role in your portfolio and how did you select it among other assets?

---

Adding $STEEM token into my crypto asset diversification will always be a smart move based on several variables considered and the experience have had over the past.

I chose STEEM because of its particular utility on the Steemit platform, one of the most vibrant decentralized social media that rewards users for creating and curating content, moreover, one could say I built my liquidity through the steemit platform and its token.

steemwallet

STEEM has a unique place in my portfolio as a specialty asset that provides me with an opportunity to earn more money just by curating content on the platform with it, and also a potential token, all my target is to keep accumulating as much as I can.

I believe that by integrating STEEM into my portfolio, I not only diversify my assets but also invest in a project that is promising and also with significant growth and adoption in the coming years.

---

Can you share a detailed analysis of your crypto assets, including their distribution, historical performance, and the criteria used to select these assets? How do these choices reflect your overall crypto asset diversification strategy?

---

Distribution: In my current Binance portfolio, I have STEEM, MEME, TRX, ALGO, and BNB.

For each asset, I gave a certain allocation based on its estimated growth potential, risk potential, and correlation to other assets. Currently, I've assigned 1% to STEEM, 88% to MEME, 8% to TRX, 10% to ALGO, and 1.2% to BNB.

Historical Performance: Historically, different assets among this list have performed at different times, STEEM, for example, has gone through cycles of bullishness in the past days and has fallen deeply as well, impacted by the overall market.

TradingView

$MEME, a Memeland project that is basically based on the exchange of NFT also has shown promise but also volatility due to its small market value, at the moment, it is currently at its lowest, and I expect a good move from here.

TradingView

If this goes as predicted, I expected $meme to beat its previous All-time High.

Also, TRX, which is known for its fast transactions and decentralized applications, has proven great resistance despite the massive market volatility, and BNB, which is the native cryptocurrency of the Binance ecosystem, has grown significantly and will continue to due to its utility on the platform, and a must hold due to begin the Number1 crypto exchange native token.

The Selection Criteria: These items were chosen based on different criteria, I analyze each asset's technology, the team behind it, the community, and their utility.

I also studied their past performance, market patterns, and trading volume, additionally, I considered each asset's overall diversification benefits and the possible contribution they could add to balance my portfolio.

---

Conclusion

---

In conclusion, crypto asset diversification is an important strategy for traders trying to manage their portfolios in the uncertain and volatile world of the cryptocurrency market.

Diversifying your portfolios as a trader allows you to spread risk, profit from different market trends, and potentially improve your overall profits.

The STEEM cryptocurrency is one example of how I carefully diversify my portfolios to serve as an investment objective and make my money work for me as well.

As the cryptocurrency market evolves, diversity will remain an important tool for traders looking to improve their investing strategy and reduce a single entity risk.

---

---

---

^{' NB: This post concerns education, not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your research and consult a financial advisor}

---