SEC S17-W4 || Crypto Assets Diversification
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Hope you all are doing well and good and enjoying the best days of your life. This is me @shahid2030 from Pakistan and you are here reading my post. You all are welcome here from the core of my heart.
This is my participation in a contest Crypto Assets Diversification organized in SteemitCryptoAcademy by @crypto-academy.
What are the main reasons why crypto asset diversification is important in an investment portfolio? |
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Diversification helps investors in many ways such as managing risk, capturing opportunities in the market and achieve a more balanced and resilient portfolio that helps a lot in the unpredictable world of crypto.
The most important benefit of spreading investment across the different assets in crypto market is, it helps to mitigate the risk. We can safe our portfolio from a substantial lost. For example we have 4k USDT and we invest all in ETH and price goes down from there, we will have a subsequent in our portfolio. No chances of recovery.
On the other hand, if our portfolio is spread among different assets, so lost in one coin may not effect our portfolio that much.
It also give us different market opportunities. Every crypto asset has it's own specialization. Some operate in finance, some in gaming, and some are in decentralized applications. These projects respond differently to the market situation. Now diversification helps us to grab all the opportunities in the market.
Some projects will give you more return, some will give less. The same, some currencies will give you more lost and some will give less. If you do it with proper risk management it can give you a higher overall return.
Diversification also helps us in hedging against volatility. Crypto market which is known for it's high volatility do needs hedging. Hedging helps investors in countering a sharp movement in the market through a step wise buying process.
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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Maximizing diversification means minimizing your overall portfolio risk. It greatly helps us in the volatile crypto market. In Diversification we spread our portfolio in different assets. I keep these several things in my mind while going for diversification option.
I allocate my funds across different categories of cryptocurrencies based on their cap, such as Large cap (BTC, ETH, BNB), medium cap ( Sol, Dot, Icp) and small cap ( memes coins or certain other coins which are under $1).
In down market my another best strategy is moving to stable coins such as USDT, BUSD, and USDC. Fiat currencies also act as a hedge against crypto market downturns.
Risk management is the most prior thing to cope up with volatile crypto market. Do a proper research on each cryptocurrency before investing. Check all the technical and fundamentals and go for a coin you think give positive indications and is more safe.
Diversification should be on the basis of time period too. We should look for a project whether it's good for long term, mid term or short term investment. Mostly long term projects are more safe and give us good profit.
Now we can apply all these points on our portfolio and will divide our Portfolio accordingly.
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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Diversification help us to cope up with a too much volatile market. We spread our capital through different assets, which helps us divide the risk ratio too. For example, if one cryptocurrency experiences a sharp decline or downward movement, others may remain stable or even their is a chance in increase in value, which helps to offset the loss.
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I am giving a practical example of it of somedays ago. I have some steems worth of $130. That day steem price was high, around $0.34. I have transferred my capital to SOL, it's price day was $128. Sol then went to $158 and I have sold it. I bought Steem again, and my buying place was $0.28. Now I have total revenue of $168, which was $130 some days ago. This is how spreading and movement of assets help us to gain profit.
I have another solid example of diversification that helped me in the past. I had around 1k dollars that time. I invested 70% of it 30% was in back up with me. My portfolio was invested in different coins, it was BNB, SOL, LUNA and some Memes coins in it. LUNA crushed from $100 to $30 in one day and then from $30 to $.0003. Now my investment in LUNA which was something $200 all gone, but other in BNB, SOL and memes coins I was safe there.
Yeah their prices got devalued too, but not like LUNA, which had turned $200 to $0.0006. Now Imagine if I have invested all in LUNA what would happened? I would have lost all my money. Here I was saved by diversification strategy.
Hedging is also a type of diversification. In LUNA crush i have made money money through hedging and had recovered my lost. I have bought LUNA of $300 when it's price was $30 and then sold out at $50. LUNA has touched $50 after coming $30 and take advantage of it. After I sold out it went very bad and touched $0.0003. So my aim to discuss this thing here is hedging can also help us to remain safe in volatile market.
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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To be honest I have never bought Steem Coin before working here on Steemit. Since I have joined Steemit I start putting steem coin in my portfolio. Multiple times it happened that I have only steem coins in my portfolio as it is now. Yes it's against diversification mechanism but I have hold steem for a valid reason now.
STEEM is the part of my portfolio for last one year. It comes under the category of coins having below $1 value. I put it in my wallet because I think it can give me a good return in future inshAllah. Seeing it's performance in the current market I am hoping that inshAllah Steem will have $1.20 to $1.50 price in this bull run (This is just my opinion not a financial advice). I believe by 2025 Steem will reach this level inshAllah.
STEEM is a part of my portfolio and I am not putting all my assets in it or other specific crypto currency, this is called diversification. Now How will Steem help me? STEEM will help me in that case, if for example I have bought SOL and DOT and STEEM. Now SOL and DOT get dump and STEEM is at constant position or goes up, It will help me save from a sufficient lost. At least I will be in profit in at one place.
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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I have joined crypto four years ago. Since I have knowledge of trading I have divided my portfolio into three categories; large cap, medium cap and small cap. My favorite currencies which I am trading in for long time are: SOL, DOT, ICP, LUNA, DOGE, Shib, Mbox, Sushi, ADA, FTM, GALA, and MANA, and now it's one year I am trading in Steem coin too. I always separate my portfolio to these different projects and I have good quite good result from all these.
The coins I have mentioned above come under all the three categories. Some are large cap (SOL, ICP, DOT, ADA), some are medium cap ( Sushi, MANA, Shib, DOGE) and some are small (Steem, Mbox, GALA, FTM). I always spread my portfolio in these coins. inshAllah I have plan of great investment and these coins are my target to invest in.
Mostly my target is of long term investment in these projects. Now I am investing and I have plan to hold these for at least one year. I still have some meme coins even I am holding for more than two years. Long term investment always give me more profit compare to other.If I look about my past experience with these coins I can say my profit Ratio is MashAllah way better than lost.
I diversify my portfolio like that. For example I am doing $1000 investment. I will invest $500 in large marketcap, $300 in mid marketcap and $200 in small marketcap coins. After that I make a plan which coin to hold for long term, which for mid and which one for short term.
This is all about my blog for today, hope you guys have enjoyed reading it. See you soon with a new amazing and interesting topic, till take care.
| I would like to invite: @solaymann @waterjoe , @willmer1988, @msharif @cive40, @jasa107, @miyexi, @kouba01, @nathalidelgado, @emsonic, @elrazi, @safridafatih to participate in this Contest |
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Your presence here means alot
Thanks for being here
Regard shahid2030
Upvoted. Thank You for sending some of your rewards to @null. It will make Steem stronger.
Great insights @shahid2030 Your strategy of diversifying across different crypto assets makes a lot of sense. Its smart to spread out your investments to manage risk and seize opportunities. Your examples of how diversification has helped in volatile markets are really helpful. Wishing you the best of luck
Thank you so much dear for your beautiful comment. Keep blessing.
Assalamualaikum Shahid brother,
Umeed ha ap khairyat sy hongy. Apny bht achy andaz me is post ko biyan kia ha or me apki presentation ki tarif krta hun. Hamary portfolio ki Diversification hamesha hamy faida deti ha khas tor py jab market me volatility ziada ho.
Crypto ki dunya sy judy huy har bndy ko LUNA ka crash bht achi trha yad ha. Ye jan k acha laga k us time diversification ki waja sy apko ziada bhari nuksan ni uthana pada.
Me apki kamyabi ka duago hun. Great luck 🤞
Thank you so much dear friend for your so much precious and beautiful comment. Keep blessing.
Everything you explain to us about the advantages of diversification in the crypto market is very important and true. Cryptocurrencies are very volatile and diversification helps us mitigate risks in an appropriate way. We had one of the greatest examples of the importance of diversification precisely in what you mentioned happened with the LUNA cryptocurrency. An investor who had his capital fully invested in that cryptocurrency would have gone bankrupt when the crash occurred.
Your post is very interesting and well focused, friend. I liked reading it. Good luck and I wish you abundance and full prosperity.
Greetings
The strategy of investing in different types of cryptocurrencies is really smart. By spreading out your investments, you're reducing the chances of losing all your money if one cryptocurrency doesn't do well. Plus, it gives you more chances to make money if some cryptocurrencies perform better than others. Your examples of how diversification has helped in such an unpredictable markets is also very helpful and useful for every cryptocurrency investor. Good luck friend.
Thank you so so much my dear friend for your brief comment. Keep blessing.
You have created the best strategy for diversifying your assets, sir. I want to let you know that portfolio diversification is a very important means of investment in the crypto space. Good luck to you.
Thank you so much dear for your beautiful comment. Keep blessing.
Hello friend I must say once again thanks giving us an outstanding and a very special content and I must say your content is very educational, informative special and it has left me knowledgeable as a short period of time. Indeed I love how you made deep research on all the assets you are investing into, I also love how you focus on checking the cap to know how profitable and the chances this asset would produce you nice profit.
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Thank you so much dear for your precious response. Keep blessing friend.