HOW TO DIVERSIFY YOUR INVESTMENT
While Bitcoin has long dominated cryptocurrency news, altcoins are gaining traction as well. Whether it's Dogecoin's price growth or Ethereum's advancements, it's critical to comprehend what's on offer while investing or crypto trading. With so many cryptocurrencies to select from, let's look at some of the most popular projects across different crypto asset classes.
A cryptocurrency that is not Bitcoin is known as an altcoin. Other coins and tokens have emerged as alternatives to Bitcoin, which established the cryptocurrency market as we know it. Altcoins range from large-cap coins like Ether and BNB to tokens from recently established initiatives. ERC-20 tokens on Ethereum and native tokens on other large blockchains have long been associated with altcoins.
Why you should diversify your crypto investment
As a responsible investor, you should diversify your investment portfolio, even though Bitcoin (BTC) has the greatest market cap and is the most well-known cryptocurrency. You'll need to buy altcoins to accomplish this in the crypto realm. Exposing your cryptocurrency portfolio to various currencies and industries in crypto, such as Decentralized Finance (DeFi) or GameFi, will help you lower your total risk. This manner, if Bitcoin's price plummets, your other crypto holdings may be able to compensate for some of the losses.
You can easily diversify your cryptocurrency investment by spreading your investment across several cryptocurrency sectors such as blockchain coins, DeFi tokens, etc.
| CATEGORY | REASON/USES | EXAMPLES |
|---|---|---|
| BLOCKCHAIN COINS | These are primary tokens of a blockchain. They are good for long term investments because as the blockchain continues to offer value, these coins tend to appreciate in value | ETH, Sol, Steem, BNB, DOT, TRX,etc. |
| DeFi COINS | These tokens offer various ways of earning for holders. They are used in staking, governance, farming, etc. And holders tends to earn passive income just by holding. | Uni, Cake, Avax, Aave,etc. |
| MEME TOKENS | These coins doesn't clearly have usecases but they have been to provide high returns for investors due to their high level of volatility. | Doge,Shiba Inu, etc. |
| STABLE COINS | These are the stablecoins among cryptocurrencies. It's always good to save some funds in them. This will also help you in buying the dip when necessary. | Usdt, USDC, BUSD, etc. |
| METAVERSE COINS | These are tokens used in purchasing items in the decentralized digital world known as metaverse. With the increase in NFT aware and adoption of Metaverse, these tokens tends to appreciate in value | MANA, Ape, AXS, Sand, etc. |
The popularity of Bitcoin has caused it wide range of adoption and very high market value. Nevertheless, some crypto investors still go after investing in Bitcoin. In as much as this is good, it is always best to diversify investment in other to reduce absolute risk and increase the chances of higher returns.
Note: This post is only for educational purposes and not a financial advice. The cryptocurrency market is volatile and anyone that wants to do a crypto investment is best advised to carry out their own research and invest only what they can afford to lose.
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