IMPORTANCE OF INVESTING IN DIVERSE CRYPTO ASSETS

Few months ago, the crypto world experienced an event that most persons thought was most unlikely. We saw UST, a coin valued above a dollar drop to far less than a cent in a matter of days. Although a lot of initiatives have been suggested in an effort to bring back the one time crypto giant, all efforts have proven abortive.

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During those month, we saw a lot of out cry on the social media. A lot of persons who invested their life savings, their children tuition fees, their house rent and so forth were pushed to the verge of attempting to take their lives. There was one story which was percuiliar. A man who claimed to have converted all his cryptocurrency assets to UST just a week before, due to how stable he felt the currency was.

Although those who didn't suffer from the financial loss caused by UST crashing may be quick to judge those who actually invested in that particular cryptocurrency, but can they actually be blamed? One of the first things we are thought about cryptocurrency investment is that cryptocurrencies are very volatile. It is as a result of its volatile nature that we make profit. It's volatility is also the reason why we lose money.

But, are we going to use because of sad stories like the UST and Luna situation and avoid making crypto related investments? The answer is no. Cryptocurrency is here to stay, what we can do is to figure out what those who lost their money in crypto investment do wrong and try our best to avoid making such mistakes too.

In the case of the Luna and UST financial crash, the people who suffered the most had one mistake they made in common, and that was that almost all the assets they had in their portfolio was only UST. They didn't diversify their assets. That was a big mistake. In this post, I will be sharing with reason why it's important to have diversified crypto assets in our portfolio.

1. Help to reduce the effect of losses:

Every investor must understand that there is a likelihood that his/her investment may not go as planned. For this reason, it's very unwise for an investor to invest all he has in only one investment. This same financial advise is applicable even when investing on crypto assets.

The crypto market is very volatile, an asset that just made you millionaire today can in a twinkle of an eye bring you down to nothing. Assuming you invest in more than one cryptocurrency asset, a market failure in one of the asset will not completely bring you down financially. There is an adage that says, do not put all your eggs in one basket, so that you won't lose all your eggs if that single basket falls.

2. To reduce the effect of losing to crypto scams:

Apart from the loss due to the financial instability of the crypto market, another reason why people lose money in cryptocurrency is through crypto scams. Due to the fact that most cryptocurrencies have their white paper in the public domain, we have seen a lot of people create scam cryptocurrencies. What they do is that they make the cryptocurrency so promising, and after they have brought it a lot of investors, they just shut down the project, running away with the investors funds.

By diversifying your funds, you will not be tempted to carry all your funds to invest in any particular crypto assets just because you heard that it's promising.

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3. Other benefits of diversifying:-

There are still other benefits such as, increasing your finances faster. The crypto market rises at different rates for different assets. By having more than one type of cryptocurrency asset, you can take advantage of all that these assets offers.

In addition, some crypto project reward those who hold their tokens periodically. A person who holds several crypto assets in his/her portfolio will be able to take advantage of these rewards, and the process, earn more assets.

Thank You.

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