{"id":1702,"date":"2024-08-18T11:19:08","date_gmt":"2024-08-18T11:19:08","guid":{"rendered":"https:\/\/www.bitvalve.com\/blog\/?p=1702"},"modified":"2024-08-20T10:52:01","modified_gmt":"2024-08-20T10:52:01","slug":"5-ways-to-balance-your-crypto-portfolio","status":"publish","type":"post","link":"https:\/\/www.bitvalve.com\/blog\/5-ways-to-balance-your-crypto-portfolio\/","title":{"rendered":"5 Ways to Balance Your Crypto Portfolio"},"content":{"rendered":"\n
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Trading in crypto can be a lucrative way to earn money and an important hedge against inflation in fiat currencies.<\/a> As is this the case with any trading in financial assets, crypto also comes with risks of its own. That\u2019s why it\u2019s essential for investors to balance a crypto portfolio and diversify to lower the risks.<\/p>\n\n\n\n

In this article, we will explore a few different ways investors can diversify their portfolios without jeopardising the profits that they can yield. The key is to balance the types of cryptos you\u2019re investing in.<\/p>\n\n\n\n

1. Invest in the Big Coins<\/h2>\n\n\n\n

It may seem obvious advice, but investors looking for ways to include as many different cryptos in their portfolio often overlook the big ones. Regardless of how complex and well-created, every portfolio should include Bitcoin<\/a> and Ethereum<\/a> as the most popular and largest cryptocurrencies.<\/p>\n\n\n\n

These cryptos are known to fluctuate, as are the altcoins, but in the long run, they are the safest assets to buy and holdin the world of crypto. The value of the largest coins out there will also indicate further changes in the market. Some crypto exchanges also offer portfolio management services that can help novice investors decide how much of their assets should go towards Bitcoin. <\/p>\n\n\n\n

2. Explore Altcoins<\/h2>\n\n\n\n

Altcoins<\/a> is the term used for all cryptos other than Bitcoin. At least a portion of your portfolio should be dedicated to them since it\u2019s a good way to balance between the big names and smaller coins. At this point, when the market is quite advanced, even the smaller altcoins have a market cap in the billions of dollars. <\/p>\n\n\n\n

Its always best to divide the portfolio between a few larger altcoins, such as Tether, and a few niche coins that usually have a specific use. Tether, which is available in many exchanges, has a market cap of over $110 billion. In fact, in 2019, it surpassed Bitcoin in trading volume. Crypto exchanges allow users to trade in a great variety of altcoins, and the process is the same as buying or selling a large crypto. To explore the different Tether exchanges and their offers, use this resource<\/a>.<\/p>\n\n\n\n

3. Include Stablecoins<\/h2>\n\n\n\n

Stablecoins<\/a> are somewhat controversial among crypto enthusiasts as they go against the main principle of cryptos. Their value is tied to the value of a fiat currency \u2013 usually the US dollar. This makes them much less volatile than cryptos, but they have all the features, such as smart contract usability.<\/p>\n\n\n\n

Including stablecoins in your crypto portfolio is a good idea, as they balance it out and make it less volatile. However, stablecoins are a no-go for those using cryptos to escape government control.<\/p>\n\n\n\n

4. Diversify By Use<\/h2>\n\n\n\n

Once you\u2019ve covered your ground with the biggest coins and some stablecoins in the portfolio as well, the next diversification should be done by use. Cryptos can be used in many ways, and various industries have already accepted them. For the purpose of portfolio diversification, there are four main use cases to focus on.<\/p>\n\n\n\n