SEC S17-W4 || Crypto Assets Diversification
Crypto asset diversification is important in an investment portfolio due to multiple reasons:
| Risk Management | Diversification can be helpful for reducing risk by diversifying investments across different asset classes, which include reduction in exposure to a single particular asset fluctuations |
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| Return Optimization | Diversification can be a source to increase significant returns by investing in different assets with changing in performance which overall reduce its reliance at single asset performance. |
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| Market Uncertainty | Crypto markets are much volatile and we can't predict them and there's a way called diversification useful for navigation of this uncertainty by reducing exposure to a single segment of market. |
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| Asset Correlation | Diversification is helpful in taking benefit of low correlation within multiple crypto assets which is a way to reduce overall portfolio risk. |
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| Regulatory Uncertainty | Diversification is helping in mitigating other regulatory risks by diversification of investments across multiple asset classes and jurisdictions. |
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| Innovation and Growth | Diversification is a way to permit investors so that they may participate in different projects related to crypto innovations and development opportunities instead of showing their reliance on at single asset or particular segment. |
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By diversification of crypto asset portfolio, investors can get help while making their strategies related to investing in future.
Diversification of a crypto portfolio includes diversification of investments across multiple asset classes, sectors, and geographic regions for minimization of risk.These are some strategies for maximizing diversification while minimization of risk.
| Asset Allocation | First you need to divid your portfolio in various asset classes, like Bitcoin, Ethereum, altcoins, stablecoins, and many more other tokens. |
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| Sector Diversification | There is a need to show your investment in multiple sectors such as DeFi or social media. |
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| Geographic Diversification | There is also a need to in different projects from multiple areas of world such as Asia and Europe etc. |
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| Risk-Return Balance: | One of most important thing is the allocation of assets depending upon their risk tolerance, with high level of risk investments which can be further maintained by more stable ones. |
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| Regular Rebalancing | Reviewing and adjustment of your portfolio at regular basis is important for maintaining allocation of your target. |
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| Dollar-Cost Averaging | Investements of fixed amount at continuous intervals instead of thinking of market conditions is important. |
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| Research and Due Diligence | There is a need to thorough made a research By creating a research project of experienced team before making investing decision is important. |
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Diversification of crypto assets is a continuous process, and there is always a requirement of continuous monitoring and adjustments for maintaining an optimal portfolio.Consultation with financial experts and complete research before making investment decisions are really much significant.
Diversifying crypto assets can be very helpful in mitigating market fluctuations by reduction in exposure to any single asset price volatility. By diversification of investments across different asset classes, sectors diversified portfolio can be helpful in the following.
| Reduce risk | Minimization of effect of a single asset decline in price at overall portfolio. |
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| Increase stability | Compensation of price volatility if your portfolio have more stable assets. |
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| Enhance returns | Helpful in catch out development opportunities and probabilities in multiple assets and sectors. |
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This is above you can see how I have diversified my portfolio with multiple assets for mitigation of risks.
These are some concrete examples of diversification positive effect
- In past in year 2021 crypto market has been crash, then at that time diversified portfolio with multiple crypto assets such as Bitcoin, Ethereum, and stablecoin have been helpful in reduction of losses as compared to those people who were owner of single-asset in their portfolios.
- In past in year 2018 a portfolio has been diversified in different sectors including DeFi, gaming, and social medi have been seems to be helpful in mitigation of effect of the ICO market dump.
Diversification is one of most significant risk management strategy while investment decisions making in crypto, so it is helpful to navigating the market volatility and uncertainty.
STEEM token is one of the native cryptocurrency of the Steemit platform and STEEM Blockchain, which is helpful in playing its significant role in a diversified crypto portfolio. As steemit is a social media platform token that's why STEEM is a representative of a different asset class and STEEM also have different a d special use cases in comparison to traditional cryptocurrencies such as Bitcoin or Ethereum.
STEEM has its role in a portfolio which I am explaining below 👇
| Social media and community engagement | STEEM incentivization of content creation and community participation is a great way to offer a different and unique value proposition which can't be possible with traditional cryptocurrencies. |
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| Diversification | Addition of STEEM to my portfolio is a great way of providing exposure to a significant and unique class of asset so it is a way of reduction of its reliance at single type of cryptocurrency. |
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| Potential for growth | With time Steemit platform is growing due to innovative measures so STEEM value can also pump so it's a way of providing a significant growth opportunity for long term. |
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Selection of STEEM among other assets needs to consider different factors
| • | STEEM use case and usage. |
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| • | For purpose of market capitalization and for providing liquidity. |
| • | For support of community and its adoption. |
| • | For the development of team and roadmap |
| • | For maintaining regulatory compliance and associated risks. |
By evaluation of all these factors, investors can feel that it's now helpful and easy to determine if STEEM is aligning with their investment goals and risk tolerance, and whether it is contributing to a diversified and more resilient portfolio.
Yes ai have my personal example of a diversified crypto asset portfolio and different criterias I have used to select the assets.
My Portfolio
- 48.35% Solana (SOL) - Solana is high performance blockchain with improved scalability, and developing related to its adoption.
- 29.87% BNB - Highly scalable crypto assets.
- 26.07% STEEM - Based of social media, community engagement and interaction, and content creation and Curation.
- 0.10% MOBOX.
- 0.11% other assets.
Criteria for selecting them
| • | Which crypto assets have more market capitalization and high liquidity. |
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| • | Which one have special and unique use case and high level of utility (including store of value, smart contracts etc.) |
| • | Which one have significant level community development and adoption. |
| • | Which one have improved scalability and high performance. |
| • | Which one have more regulatory compliance and risk mitigation capabilities. |
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• These you can see historical performance of crypto assets that have been diversified in my personal portfolio.
My portfolio is reflecting a diversified strategy by following the below points
- By the diversification of multiple assets across multiple sectors like store of value, smart contracts any many more.
By the addition of a mixture of assets that have high cap and mid cap.
By selection of assets that have some particular use cases and usages.
By keeping in mind about scalability, performance, and adoption like points.
By the maintainance of a balance between liquidity and risk.
It is always significant to show your interest in consultation with financial expert and have proper research before making investment decisions.
I want to invite
@stef1
@irawandedy
@enamul17
Upvoted. Thank You for sending some of your rewards to @null. It will make Steem stronger.
Hello friend I must say you article is so interesting and very organized among all other articles I love how you presented the article with high quality markdowns which made the easier for me and anyone to go through it as a shorter period of time without difficulty in Reading.
Diversification is a very powerful technique that don't need much stress to implement, it is simple but very technical and this alone makes it very outstanding risk management technique that makes it nice and give his edge over other tools
Thank you for going through please engage on my entry through the link below https://steemit.com/hive-108451/@starrchris/sec-s17-w4-or-or-crypto-assets-diversification
Looking at the diversification in your Personal Portfolio, I can say that it's a very smart move to keep solana as it gives so many oppurtunities of getting quick profits through scalping. Only today it increased 8%
Your article is really well organized with some thoughtful points. Best of luck
TEAM 5
Congratulations! Your post has been upvoted through steemcurator08.Hello sahar ,
I hope you are living a very happy life and maintaining good health. I didn't know that Solana SOL is such a good crypto asset. I haven't heard much about it and I don't know much about it in deep. I gained a lot of knowledge by reading your post. Thanks for this post.
Blessings to you ❤