SEC S17-W4 || Crypto Asset Diversification by @huzaifanaveed1
Dear Steemians,
How're you all doing? It feels absolutely wonderful to be back in this community after so long. Only recently I suggested about bringing back the weekly crypto academy lessons and I think it'd not be fair if I'm not participating in crypto challenges myself. I haven't lost the touch as I have been into the crypto market for over 4 years now.
This week we have an interesting topic which will help the traders to minimize their losses and maximize their profits while trading. CAD or Crypto Assets Diversification is something I advocate strongly. In this article you'll get to know why. Let's begin.
What are the main reasons why crypto asset diversification is important in an investment portfolio? |
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(اپنے تمام انڈے ایک ٹوکری میں نہ ڈالیں) Don't put all your eggs in one basket. I'm sure your parents have said this statement to you atleast once in your life. But what does this statement actually mean? What does 'eggs' denote and what does a 'basket' mean? In simple words it means to not to invest 100% of your money into a single project. It's a rathe foolish thing to do. Yes I know sometimes it gets tempting for us to invest all our money in a single project to get maximum profits but more often than not this approach haunts us in the long run. We have seen countless examples of rug pulls in the crypto market the biggest one being LUNA due to which 17 people committed suicide worldwide.
CAD is a strategy followed by seasoned traders alongside DCA. This is done to secure one's capital amount in case things go south. For those users who are amateur in the crypto academy, I'll explain it in very simple words:
Lets assume you had $100 and you invested the entire amount in a project and at the same time, I also had $100 and I only invested $20 in it according to the 1-5 rule (I'll explain later what 1-5 rule is) and the rest $80 into four different projects.This crypto project in which you had invested your entire capital of $100 suddenly got a downshift and dropped by 40%. Due to this you're left with $60 bearing a loss of $40 while on the other hand I have $12 bearing a loss of only $8
Sure we both are at a 40% loss, but I still have four more projects to make profits from while you have you entire capital in this single project.
So why is Crypto Assets Diversification important?
Risk Management: Risk management is the most important thing while trading. If you don't learn risk management, you may as well not get into crypto market.
Market Exposure and Growth: investing in more than project requires fundamental and technical analysis of various projects. This helps you in understanding the market in a good manner making you less anxious and more open to learning as well as growth oppurtunities.
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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Before I get into the details of explaining my diversification strategy, let me first post the real screenshots of my assets.
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STRATEGIES
- Different Exchanges:
Once again, we've seen this for a very long period of time, Exchanges and wallets getting in trouble with the Governments of different countries which in return results in the freezing of your assests. This as given anxiety to a lot of traders over the course of time. To tackle this situation, I am trading on three exchanges.
- Diversification in the Sector:
If you go through the screenshots above of my portfolios, you'll notice that I have diversified my Capital in all sorts of asset types, these include:
Stable coins
Meme coins
Gaming coins
Nfts
- Diversification of Blockchains:
The best way of securing your funds is to spread through different strong Blockchain networks. My real life strategy of diversification includes the division of my funds through the:
Solana Blockchain
Ethereum Blockchain
BNB smart chain
Sui Network
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? |
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Oh who better than me to know the importance of CAD in order to save myself from sudden market volatility and minimize my losses over the period of time. A long time ago when I didn't follow any particular strategies, I used to be a very bad trader, with no long term aims and bearing hefty losses. Then I learned the basics of market. Trust me it took me a lot of time doing it, and this crypto academy helped me through the assignments.
Anyway, diversifying crypto assets help us mitigating the market volatility or saving us from sudden drop in the market through spreading our capital in different assests. The main motto is maintaining your portfolio balance. If for instance one asset is going south due to FUD or anything else, the other assets might help you in balancing it out.
Example:
I always advocate for giving graphical representation so that it's absolutely clear for a reader. Similarly for this question I'll also give you an example of how diversifying my portfolio helped me in balancing the loss that I was facing not so long ago.
I have been DCAing Myro for a very long period of time now, with my lowest buy as low a $0.06 but last week when there was a dump in Myro/usdt I opened my buy position at $0.15 but it didn't work out as I had planned. I didn't get stressed out even for a minute as I had diversified my capital and at the same time another asset was giving me more profit than compared to losses in Myro.
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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Being a steemit user since 2021 steem has a really important role in my portfolio. I have Hodl a lot of steem over these past 3 years so it's obvious that Steem is one of my main assets. Why is that? Let's find out:
Multiple Uses: there are a very few cryptocurrencies available that have the availability of their own social media platform. We have amazing possibilities of earnings through the Steem social media.
A strong Project: being asscoiated with the Steem ecosystem, I have come to a realisation that the the only way is up with steem. With its price being as high a $8 we still have a lot of potential in it.
Individuality: Why use the word 'Individual' because Steem stands out from other Blockchains. It's unique in a feature being decentralized and secured. The community users on this platform are awarded generously in return of their valuable content.
Keeping all these reasons in mind, steem has always been one of my strongest projects in my portfolio. Right now as we speak, steem holds more than 30% of my binance portfolio.
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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FLOW
Ranked #62 on CMC, Flow works on the Proof of Stake (POS) consensus mechanism and is a stron metaverse asset and also supports NFTs, Defi decentralized applications etc. Flow has a strong team on its backend which aims to shine at the Web3. The other projects introduced by the team are Cryptokitties, NBA Top Shot, NFL ALL DAY etc.
DATA:
| MARKET CAP | $1,255,915,616 |
|---|---|
| VOLUME (24H) | $48,282,029 |
| CIRCULATING SUPPLY | 1,503,293,597 FLOW |
| TOTAL SUPPLY | 1,503,293,597 FLOW |
ALLOCATION
| ECOSYSTEM RESERVE | 29.6% |
|---|---|
| COMMUNITY SALE | 27.7% |
| DAPPER LAB | 18.5% |
| DEVELOPMENT TEAM | 16.6% |
| STAKING REWARDS | 7.3 % |
HISTORICAL FACTS
Flow has reached it's ATH $42 in the 2021 bull run and I believe it still has the potential to break the ATH
MYRO
Ranked #356 on cmc, Myro is a Solana based decentralized crypto coin that is named on the dog of Solana's owner Raj's dog Myro.
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It was launched not long and it broke it's ATH ($0.26) recently and rallied upto $0.45
Myro, currently is not doing well like the 90% of othe crypto assets due to the volatility in BTC movement
DATA
| MARKET CAP | $127,632,372 |
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| VOLUME (24H) | $19,457,845 |
| CIRCULATING SUPPLY | **944,203,815 MYRO |
| TOTAL SUPPLY | 999,203,815 MYRO |
HISTORICAL FACTS
Myro recently broke its ATH of $0.26 to hit $0.45 mark. Currently it's down to 0.13
In this upcoming bull run, this low cap coin has a huge potential to reach the $1 mark.
SOLANA
Do I even need to speak about Solana? I'm sure 99% of you have heard about this coin even those who are not into crypto. Founder by Anatoly Yakovneko and Greg Fitzgard in 2020. It is ranked #5 on CMC. Solana works on a combined mechanism of Proof of history and Proof of Stake consensus mechanism through which the scalability of Solana has increased significantly. Apart from this, these consensus mechanisms allow a very short time period for transactions and smart contract execution.
DATA
| MARKET CAP | $57,210,796,820 |
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| VOLUME 24H | $3,001,870,789 |
| CIRCULATING SUPPLY | 447,320,933 |
| TOTAL SUPPLY | 574,910,883 |
ALLOCATION
| COMMUNITY RESERVE | 38% |
|---|---|
| SEED SALE | 15% |
| TEAM | 12.5% |
| FOUNDATION | 12.5% |
| VALIDATOR SALE | 5% |
| STRATETIC SALE | 2% |
| PUBLIC AUCTION SALE | 1.6% |
HISTORICAL FACTS
Solana reached it's ATH $250 in the 2021. It's still doing good and I believe it has the potential to reach upto $500 in the upcoming bull run.
ASSET ALLOCATION ON BINANCE
| FLOW | 30% |
|---|---|
| STEEM | 38% |
| SOL | 10% |
| ALICE | 10% |
| SUI | 2% |
| LUNA | 8% |
| MINA | 2% |
ASSET ALLOCATION ON KUCOIN
| MYRO | 20% |
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| SILLY | 20% |
| DOGE | 20% |
| BONK | 20% |
| VANRY | 20% |
In this article I explained in detail the understandings of Crypto Assets Diversification. I presented my own portfolio and showed how I followed Crypto Assets Diversification with real life examples and technical analysis as well as fundamental analysis. All the graohs and pictures are sourced accordingly. Lastly we share about the the strategies and how Steem has a role in my portfolio a well as detailed analysis of my assets. I'd like to end this article by inviting my three friends @malikusman1 @fredquantum and @irawandedy to participate in this challenge.
Thank you
Regards,
@huzaifanaveed1
@huzaifanaveed1 Welcome back to the crypto community! Your insights on Crypto Assets Diversification (CAD) are invaluable especially for traders looking to minimize losses and maximize profits. Your analogy of not putting all eggs in one basket perfectly encapsulates the essence of diversification.
I appreciate how you've simplified complex concepts like risk management and market exposure making them accessible to all traders regardless of experience. Your personal diversification strategies including spreading investments across different exchanges sectors blockchains and assets are insightful and practical.
I'm glad that I was able to simplify this assignment for you. Thank you for going through my post
TEAM 5
Congratulations! Your comment has been upvoted through steemcurator08.One part that is closely linked to trying to diversify crypto assets is avoiding large losses. I think that to achieve that diversity it is extremely important to know the projects, as you have mentioned.
When we are newbies, we believe that investing is easy and it turns out that strategies are needed. The emotional part, knowing how to wait, also plays a fundamental role.
I found the analysis you did of Myro interesting, and it is a great fact that you mentioned: Flow, as a currency that has good foundations. And well, it is logical to have Steem because it is the asset that we receive in Steemit.
You made a great post, I congratulate you and wish you much success. Greetings and blessings.
Thank you @inspiracion for your detailed review of my post. Indeed its true that newbies find it hard to trade that is why I keep telling people that trading is not for emotional people
Yes, that's so true. In fact, I have learned a lot about patience by watching how crypto trading works. The most patient can see good results.
Thank you for sharing your knowledge.😊
Upvoted. Thank You for sending some of your rewards to @null. It will make Steem stronger.
TEAM 5
Congratulations! Your post has been upvoted through steemcurator08.Wow you have really did a great job in explaining the crypto assets Diversification and trust me. A whole lot of us really need to understand how this works as it will helps our finances and help us to track our assets
Thank you for taking out your time and going through my post
Hello friend greetings to you, hope you are doing well and good there.
You have started your post with such a beautiful quote "Don't put all your eggs in one basket". This is actually what we mean when it comes to the real meaning of diversification. This example tells us about the importance of it.
You have mentioned LUNA's example here. I was also badly hit by that scam, but Alhamdulillah my portfolio was spread across different coins which made me safe. I think $200 was just $0.005 in one day haha. So here we know the importance of diversification when a situation like that comes to us.
You have shared such a beautiful strategy of how we should invest in different coins. I mostly target stable coins and memes coins. The best reward is in meme coins, but it needs a high luck. Recently pepe had given millions dollars profit to people.
I wish you best of luck in the contest dear friend. Keep blessing.
Greetings @huzaifanaveed1
Your thoughts on diversifying our crypto assets are incredibly valuable, especially for traders who want to reduce their losses and increase their profits. I love how you compared it to not putting all our eggs in one basket as itt's a perfect way to explain the importance of diversification. By spreading out our investments, we are not relying on just one crypto to make profit, which can help protect our money and potentially bring in more returns. Your insights are spot on, good luck.
Thank you sahmie for going through my post and finding it valuable. I wish you best of luck
No wonder the Prof scored you 9/10 and that is because your content deserve such high grade, it's obvious you put in a lot of energy, it made a lot of research and you gave a lot of dedication to come up with such powerful and mind blown article that keeps you outstanding among the rest.
Diversifying is a very important technique that every trader should keep in mind before investing their capital in crypto market. 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
Thanks mate for going through my post and finding it interesting. I appreciate your comment
Your analysis over diversification it's of great importance to me I appreciate your time for putting all this knowledge based together. Keep the good work.