S17W4 : Crypto Assets Diversification
Assalamualaikum dear brothers and sisters |
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Hope you all are doing well and good and enjoying the best days of your life. im @danish578 from Pakistan and you are reading my bloq On steemit platform.You all are welcome here with my deep of heart.
by @crypto-academy
What are the main reasons why crypto asset diversification is important in an investment portfolio? |
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AssalamuAlaikum I am going to share the answer to this question with you all and i hope that I will be able to make you all understand why crypto asset diversification is important in investment portfolio.
First of all you should must understand that crypto asset diversification is essential in investment portfolio. By reducing the impact of poor performance of one asset it helps in distributing the risk among different assets. Additionally it allows investors to capture valuable opportunities in different sectors of the crypto market.And through this diversification can also provide exposure to different technologies and use cases of the crypto world which may give better returns in the long term.
I am sharing this with you along with some examples which will make it easier for you to understand.Lets suppose an investor has only one crypto asset like Bitcoin in his portfolio. If the price of Bitcoin starts falling his entire portfolio will suffer a negative impact.On the other side if he had diversified his portfolio like into Bitcoin, Ethereum, and Binance Coin Means BNB, then even if the price of Bitcoin falls, the impact on the other assets would have been less and he will not suffer from entire negative impact.I hope that with this one example you will get the answer to this whole question clearly.
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Can you explain how you diversified your crypto assets in your personal portfolio? What strategies have you used to maximize diversification while minimizing risk? |
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Yes I can definitely explain how I manage risk by diversifying in different crypto coins, so first of all let me tell you that apart from spot I also used to do future trade but after some time I stopped that, now I will only tell you about spot, that I invest in steem coin and oxt coin and as my investment is not that much, due to this I cannot choose more coins.
Now, if I take an example, if I had $1000, then I would not invest every single $ of that thousand in any one coin. According to the prediction, if steem coin has to be pumped more than oxt, then I will invest $300 in steem and $200 in oxt. I keep the remaining $500 in backup. I always invest 50% of my money in coins because sometimes it happens that there is a sudden dump in the market, so it is important to have funds for that time, so I would definitely want to keep some amount in $.
I hold it in my wallet instead of placing it in an exchange Why?
Now I would like to tell you that the best way to avoid this risk is to hold it in a wallet like a trust wallet or metamask wallet. The reason is that at any time the coin gets delisted from the exchange. That is why if I hold it in my wallet and after that the coin gets delisted from the exchange, then we can transfer it to another exchange and sell it.
Now I would like to explain this to everyone with examples that if I buy steem coin and keep it on binance and steem gets delisted from binance then what will happen to my steem token. And if we see it this way that if I bought steem from binance and then transferred it to the trust wallet, after that even if the steem coin gets delisted from binance then despite that I will not incur any loss, I can sell the coin by transferring it to some other exchange and when I want to sell it.
Now if we talk about this question, it has been asked how the market volatility can be reduced by diversifying the crypto assets. First of all, I would like to mention that by absolutely diversifying crypto assets the market volatility can be reduced as this divides the investments into different types of cryptocurrencies as I have already mentioned above. Along with diversifying I want to explain this to you once again with an example. For example, instead of investing all your money in a single coin like Bitcoin you can invest small amounts of money in Bitcoin plus Ethereum and other altcoins. Well according to my strategy we should trade with 50% of the money only but for example if we take 100% then we have invested money in all the coins in small amounts. So the benefit of this diversification is that if any one coin among these fluctuates, then our overall portfolio, whether it is $1000 or $5000, we have invested only 20 to 30% on that coin. Because of this, our impact on the overall portfolio is reduced.
Apart from this, a concrete example of diversification is that if during market downturns there is a significant drop in the value of one cryptocurrency, like I will share with you through Sacrenshort, then when there is a significant drop in one coin, then the other Due to investment in assets, the impact on our total portfolio reduces.
Apart from this, we can also see its opposite, diversification in buy trend also provides opportunities for gains, as I can say by way of example that if we have invested in different coins, then when some assets perform well while If others don't do it, then because of that we also get some profit in our portfolio, even if some coins do not perform well at all.
Now if we talk about my portfolio, there is no such example in what is going on in the live market right now but there were many such examples in the past. Now I cannot give a short summary or proof of this, due to which I am not sharing it and apart from this I have explained about both buy and sell with examples, which will help in understanding the answer to this question very easily. For understanding.
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? |
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Now talking about STEEM coin, the STEEM token plays a very important role in my crypto asset diversification strategy. I hold STEEM coin as a part of my portfolio and a significantly higher percentage according to the predictions as it is the native cryptocurrency of the Steemit platform, a decentralized social media platform we work on. And we also get reward in STEEM without adding it myself, this is a part of my diversification.
The role of STEEM token is to diversify my portfolio and the STEEM that I get from the Steemit platform is also included in my portfolio and keeping them in mind, I divide this token as per percentage. Like if I have $1000, then I have decided to invest $300 in this token and I already have tokens worth $200, then I will again invest another $100 in this token and this also generates an additional revenue for me, because This is also factual.
Why did I choose STEEM token among my other assets? Now talking about this thing, I would like to tell you that I selected STEEM token because it has a unique use case and I can see its long-term potential. I conducted market research and considered the fundamentals, technology, and community of the STEEM token when I added it to my portfolio. And along with all this, the active development of STEEM and strong user base also gives me confidence that this is a very good project and can give me very good profit and I can also generate profit from it for the long term .
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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? |
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Ofcourse I would definitely like to share it. Talking about my portfolio, in my portfolio, instead of mainstream cryptocurrencies like Bitcoin or Ethereum, I invest in alternative cryptocurrencies like OXT coin and STEEM coin. I have already mentioned this thing above and I also know that due to low investment, I choose such coins which I can buy and get a lot of coins.
Now I will tell you my strategy as to how and why I invest in these. My strategy is to support emerging projects and decentralized platforms and observe their growth. If I explain this with an example then you will understand that there is steemit platform and it provides us steem token which is the native token of steemit platform (Steem). This is a long term and strong project and its prices are low, that is why I invest in it. For example, if I talk about Bitcoin, there was a time when the price of Bitcoin was $1 and if at that time someone had bought it for just $10, then think about how many dollars he would have today. Now if I buy stem at $0.25, if its growth is good then I can get a lot of profit in the future.
Now if I take this thing the other way round, if I had invested in Bitcoin, the investment I was supposed to make in steem coin, then even if the price of Bitcoin went to $300k, I would not have got as much profit as I would have got if I had made $10 in steem coin. . The reason for this is that I had a very large share of Steem Coin, from which I made a profit, but with the same investment I got a very small share of Bitcoin, that is why I did not get that much profit.
I hope that you all would have understood these things well and I have tried my best to explain them in very simple words and tried to give my answer.
for participate in this contest.
Assalamualaikum brother.
Aik acha article!!! There is no doubt that you have done good research work while organizing this post. There are lot of things that should be in our hands and the diversification of the crypto portfolio is also one of them.
No doubt, Steem coin ko hamary crypto portfolio me aik ahm jaga hasil ha or agr hum isko apny portfolio ka boss keh dyn to is me koi galat bat ni hogi, I think.
Me apki kamyabi ki umeed krta hun. Great luck 🤞
Bilkul isko portfolio ka bods khna ma b koi harj nhi . Or bohat Shukriya mja b umeed dilana k liya brother
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Congratulations! This comment has been upvoted through steemcurator04. We support quality posts , good comments anywhere and any tags.Your thorough explanation of crypto asset diversification is commendable! Diversifying across different coins helps spread the risk and capture opportunities in various sectors of the crypto market. I appreciate your practical examples, making it easier for everyone to understand the concept. Your strategy of investing in coins like STEEM and OXT demonstrates a forward-thinking approach to supporting emerging projects with long-term potential. Good luck with
Thank you so much dear brother for this nice comment on my post i hope you read it whole
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Congratulations, your comment has been successfully curated by @kouba01 at 5%.
Hello brother it is with great pleasure I'll come today to tell you that your content is of high standard and I really appreciate how you broke down with them diversification to the understanding of even they dumbest an ignorant individual when it comes to cryptocurrency or crypto trading.
Diversification is a special to that every trader should learn to use to help save them from the volatile risk that comes with the crypto market and it asset at any period of time. Thank you for sharing please engage on my entry through the link below https://steemit.com/hive-108451/@starrchris/sec-s17-w4-or-or-crypto-assets-diversification
Assalamu aleikum brother, thank you so much for asking me that my content is of high quality and I am very happy to hear this.
And I will definitely read your entries which will give me more knowledge to learn.
Good article and finally a relief to read something that is not AI generated. Its good to know that you don't invest your 100% in a single asset, instead diversify it in different projects. That's what a smart trader does. There are also low market cap coins which can make you good profits but you'll need to have your technical and fundamental analysis on point.
Without any sort of analysis and specially technical analysis on HTF as well as LTF, it's a gamble to step into the Market.
Ps: It's my advice to you to work on your grammar and sentence structure. You can download grammarly for that
Best of luck
Hahahah @huzaifanaveed1 mena ya likhna sa phla kafi articles ko read kiya k mja zaida sa ziada information mily k ma is k bary ma likh saku or jan saku kesa likhna hai Q k CRYPTOACADEMY ka Contest mja har mrtba mushkil laga hai or pi6li martba is loya ma participate e nhi kr ska Q k mja samaj e nhi. A rhe the k kia likhna hai is martba mja @artist111 ka article jo mila hai us sa kafi help mili or mja samaj a gya k kia kia pocha gya Question ma. By the way Ai bohat e zaida amm hu gya abi is platform pr 😀 .
Qpka bohat Shukriya brother itna acha comment krna k liya or appreciate krna k liya.
By the way jaha tk Grammer ki bat hai Tu brother meri apni English tu strong nhi or ma Google translator ko use krta hu phr mja ya andesha hai k agr ma koi or tool use kr lu ya na hu ai generate hu jhy or phr mera liya masla bany Q k ya ai detector Kabi kbar apna likha hua ka b detect kr leta hn Q k ya 1 specific criteria huta us k andr ata e ya detect kr la ga. Chaha ap na likha hai ya nhi likha hai.
Lakn agr ap na recommend kiya hai tu ma zaroor isko apply kru ga ap senior hn experience hai so ap na chk kiya hu ga . Apka bohat Shukriya recommendation k liya
X promotion link: https://x.com/danifx578/status/1785972154733121699
Upvoted. Thank You for sending some of your rewards to @null. It will make Steem stronger.
Greetings @danish578,
I must say, you've done a fantastic job explaining how to diversify your crypto assets. Diversifying is all about spreading out our investments across different coins, which in other to help us lower the risk involved and allow us to take advantage of opportunities in different parts of the crypto market. I really like how you provided practical examples with STEEM and OXT to make the concept easier to understand for everyone. Best of luck to you.
Thanks alot sir yes practical Example is bery good thing because due to this anyone can understand very easy
I like the way you explained how you diversify your investment portfolio and I also liked the distribution you make of your capital in 50% and 50% to always have liquidity. It seems to me that your strategy and mine are a bit similar in that sense; And it is very important and intelligent that one as an investor always takes care of and maintains liquidity in the market; because all of our capital cannot be invested, since this would cause us to miss out on good investment opportunities every time they appear.
I also understand what you are saying about it being better to have our funds in a wallet like Metamask, instead of on an exchange, because it is very true that there is a risk or possibility that if we have cryptocurrencies on an exchange at some point they will be delisted and we lose our cryptocurrencies in the process. But in my opinion, we cannot completely do without exchanges, because they are the best way to quickly buy and sell our cryptocurrencies. Now, since it is true that the risk you mention exists, what I think is better is to have a percentage of our crypto funds (for example, 25% to 35%) within reliable exchanges (such as Binance, for example) and the rest of our cryptocurrencies in Metamask or in our Ledgers or Trezors.
I liked reading your post. It was very complete and in general terms, we have the same vision of the matter discussed. Good luck and I wish you abundance and prosperity!
Thanks alot dear friend yes 50% in backup is very interesting and also very needed think everyone should kept this think in mind during trading I'm glad that anyother i find who is thinking like me .
And also Store cryptocurrency in wallet is very necessary i explained well in post thanks for mentioning it
Again thanks alot with deep of heart for this such a nice comment .
According to your opinion the answer is also in my post That the cryptocurrecies buy and sell method i mentioned we can buy on exchanges like binance then we can transfer those coin which we should want to hold for future means According to plan about half and 1 year etc if any coin you want to hold for just 4 days 5 days then wallet holding is not best . Then you can hold your coin on exchange also but in post talked about long term holding
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Congratulations! This post has been upvoted through steemcurator04. We support quality posts, good comments anywhere, and any tags.Thanks alot @jyoti-thelight apki is support na mja kafi khush kiya hai.