Bitcoin Forum
October 22, 2019, 12:11:51 AM *
News: 10th anniversary art contest
 
   Home   Help Search Login Register More  
Pages: [1]
  Print  
Author Topic: Learn how to diversify your crypto portfolio and manage risk.  (Read 95 times)
Goodmens
Member
**
Offline Offline

Activity: 171
Merit: 39


View Profile
December 10, 2018, 12:13:53 PM
 #1

4 Types of Coins to Diversify Your Crypto Portfolio & Manage Risks

In the volatile world of cryptocurrency trading, it is important to implement some strategies needed to manage your cryptocurrency investments. Managing your investments well means that your portfolio of coins is protected against risk. This guide will explore the different type of coins you should hold in order for you to manage a well-balanced investment portfolio.

A portfolio is a term that represents the collection of all investments you own across all types of investment assets. If you only own 10 types of coins and tokens, then your portfolio consists of only the 10 cryptocurrencies. It is much better to own different kinds of investments across different categories. For instance, having a portfolio consisting of a mix of cryptocurrency coins, stocks, and bonds.

Let’s start the ball rolling by understanding the most important concept in investing, called ‘Risk’.

(Read more: Analyzing Cryptocurrency Risk: Existing Coins vs ICO)

What is Risk?
Risk is defined as the possibility of loss that an investor is willing to take in exchange for the possibility of gains from his investments.

There are generally two types of risk in the cryptocurrency market:

Market (Systematic) Risk
Market risk is the risk associated with the overall performance of the cryptocurrency markets. Market risks cannot be eliminated. If you’ve been an investor in the cryptocurrency space since the start of 2018, you will understand that the cryptocurrency market is highly correlated to Bitcoin and each other. The entire market crashed at the start of 2018 after a tremendous run in 2017, and no matter which coins you invested in, almost all coins and tokens experienced massive losses. This is an example of market risk.

Coin-Specific (Idiosyncratic) Risk
Coin-specific risk refers to the isolated risk of a single coin or token in the cryptocurrency market, influenced by factors specific to the project itself. If for example, a project experiences a negative event (such as network failure or running away with investors’ funds), then the coin holder that invested in that project will be a victim to the project-specific risk. Coin-specific risk can be reduced through diversification.

The fact is that in the investment marketplace, risks is as much an incentive as it is a red flag.  Conventional financial wisdom states that the higher the risk, the greater the expected returns. It’s no surprise that cryptocurrencies are the riskiest investments you can make.

read more at https://www.facebook.com/groups/poloxchan/
1571703111
Hero Member
*
Offline Offline

Posts: 1571703111

View Profile Personal Message (Offline)

Ignore
1571703111
Reply with quote  #2

1571703111
Report to moderator
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1571703111
Hero Member
*
Offline Offline

Posts: 1571703111

View Profile Personal Message (Offline)

Ignore
1571703111
Reply with quote  #2

1571703111
Report to moderator
1571703111
Hero Member
*
Offline Offline

Posts: 1571703111

View Profile Personal Message (Offline)

Ignore
1571703111
Reply with quote  #2

1571703111
Report to moderator
1571703111
Hero Member
*
Offline Offline

Posts: 1571703111

View Profile Personal Message (Offline)

Ignore
1571703111
Reply with quote  #2

1571703111
Report to moderator
Hivalley
Member
**
Offline Offline

Activity: 210
Merit: 19


View Profile
December 10, 2018, 12:58:40 PM
 #2

I wouldn't call cryptocurrency the investment with the highest form of risk,it may be up there with'em,but there are other investments that incorporate a higher degree of risk than that of cryptocurrencies or the bitcoin.

Diversification most times is misunderstood and it doesn't necessarily protect one from loss,nor does it reduce risk,its very possible to purchase 10 shitcoins all in the name of diversification and watch them all crumble to as little as zero value

I personally will rather invest in just the bitcoin,that spread my investments across projects that aren't managed properly
HODL2090
Member
**
Offline Offline

Activity: 210
Merit: 25


View Profile
December 10, 2018, 01:00:17 PM
 #3

Management is also a key factor when diversifying your cryptocurrency holdings. Only hold as much coins or tokens as you can conveniently manage amd track.

There are lots of benefits to having alternative holdings. You could cover up a loss in one with gains in another.
Also be very shrewd when selecting your investments.
BitHodler
Legendary
*
Offline Offline

Activity: 1414
Merit: 1168

CryptoTalk.Org - Get Paid for every Post!


View Profile
December 10, 2018, 01:06:47 PM
Merited by o_e_l_e_o (2)
 #4

I wouldn't call cryptocurrency the investment with the highest form of risk,it may be up there with'em,but there are other investments that incorporate a higher degree of risk than that of cryptocurrencies or the bitcoin.
And what are these other investment options that you are referring to with a higher degree of risk? The only thing that comes to my mind is trading and investing based on derivatives, but these are again linked to the asset class.

Overall, I legit find it hard to diversify my portfolio with how there isn't anything that grabs my attention and has fundamental value similar to Bitcoin. The closest is Ethereum, which I bought into very recently.

Having Bitcoin and Ethereum there really isn't anything else that makes sense to own because every other crypto or token will be a gamble, and I don't gamble. I only buy into fundamentals which 99.9% of crypto can't provide.

 
                                . ██████████.
                              .████████████████.
                           .██████████████████████.
                        -█████████████████████████████
                     .██████████████████████████████████.
                  -█████████████████████████████████████████
               -███████████████████████████████████████████████
           .-█████████████████████████████████████████████████████.
        .████████████████████████████████████████████████████████████
       .██████████████████████████████████████████████████████████████.
       .██████████████████████████████████████████████████████████████.
       ..████████████████████████████████████████████████████████████..
       .   .██████████████████████████████████████████████████████.
       .      .████████████████████████████████████████████████.

      .       .██████████████████████████████████████████████
       .    ██████████████████████████████████████████████████████
       .█████████████████████████████████████████████████████████████.
        .███████████████████████████████████████████████████████████
           .█████████████████████████████████████████████████████
              .████████████████████████████████████████████████
                   ████████████████████████████████████████
                      ██████████████████████████████████
                          ██████████████████████████
                             ████████████████████
                               ████████████████
                                   █████████
.CryptoTalk.org.|.MAKE POSTS AND EARN BTC!.🏆

Code:
[center][table][tr][td][url=https://cryptotalk.org/topic/21-get-paid-for-every-post/][tt][font=monospace][size=5pt]  [size=1pt][color=#22528A]
                                . ██████████.
                              .████████████████.
                           .██████████████████████.
                        -█████████████████████████████
                     .██████████████████████████████████.
                  -█████████████████████████████████████████
               -███████████████████████████████████████████████
           .-█████████████████████████████████████████████████
o_e_l_e_o
Hero Member
*****
Offline Offline

Activity: 714
Merit: 2904


Decent


View Profile
December 10, 2018, 08:15:40 PM
Merited by 1Referee (1)
 #5

There are lots of benefits to having alternative holdings. You could cover up a loss in one with gains in another.

When Bitcoin goes up, the whole market goes up. When Bitcoin goes down, the whole market goes down. You aren't going to cover your losses in one asset by owning another asset that moves in the same direction. Yes, you may get lucky and pick the one altcoin that is going to pump and buy it at the right time and sell it at the right time, but as BitHodler has said, you might as well be gambling at this point. You have a better chance of making money by just putting your entire stack on a single number at the roulette table.

The only altcoin I can see at the moment with any real use is Monero. Ethereum had some potential but it is being squandered on thousands of trash tokens using it simply to scam. I'll stick to Bitcoin thanks.

1Referee
Legendary
*
Offline Offline

Activity: 2030
Merit: 1363

Segwit please.


View Profile
December 10, 2018, 09:08:33 PM
 #6

I find it funny how people consider it to be a good idea to diversify in the crypto market. It's close to impossible to diversify outside Bitcoin itself. I'm not going to fill up my portfolio with shitcoins just because they have or might not have potential. If any coin had any sort of serious potential, it should have shown it by now, and not follow Bitcoin where it goes.

Altcoins following Bitcoin just indicates how much this market is filled with utter garbage. I said goodbye to altcoins back in 2014 and certainly won't touch any again. ICO's are one of the most contributing factors as to why Bitcoin continues to tank hard. Notice how projects having raised millions in Ether don't know how fast they should unload their coins to BTC and then dump it for USD because their own market isn't liquid enough.

Purity matters.

proTECH77
Member
**
Offline Offline

Activity: 546
Merit: 20


View Profile
December 10, 2018, 09:12:35 PM
 #7

In order to reduce risk to it minimal level in any investment such an individual must learn how to diversify their portfolio to ensure the risk involve is minimize. This doesn't necessarily mean that it must be of the same investment, that's, invest in real estate and also invest in digital currency, either way can minimize risk in any form.

Never say no to them when they ask......
BlueStackz
Legendary
*
Offline Offline

Activity: 1204
Merit: 1028



View Profile
December 12, 2018, 06:49:57 AM
 #8

4 Types of Coins to Diversify Your Crypto Portfolio & Manage Risks

In the volatile world of cryptocurrency trading, it is important to implement some strategies needed to manage your cryptocurrency investments. Managing your investments well means that your portfolio of coins is protected against risk. This guide will explore the different type of coins you should hold in order for you to manage a well-balanced investment portfolio.

A portfolio is a term that represents the collection of all investments you own across all types of investment assets. If you only own 10 types of coins and tokens, then your portfolio consists of only the 10 cryptocurrencies. It is much better to own different kinds of investments across different categories. For instance, having a portfolio consisting of a mix of cryptocurrency coins, stocks, and bonds.

Let’s start the ball rolling by understanding the most important concept in investing, called ‘Risk’.

(Read more: Analyzing Cryptocurrency Risk: Existing Coins vs ICO)

What is Risk?
Risk is defined as the possibility of loss that an investor is willing to take in exchange for the possibility of gains from his investments.

There are generally two types of risk in the cryptocurrency market:

Market (Systematic) Risk
Market risk is the risk associated with the overall performance of the cryptocurrency markets. Market risks cannot be eliminated. If you’ve been an investor in the cryptocurrency space since the start of 2018, you will understand that the cryptocurrency market is highly correlated to Bitcoin and each other. The entire market crashed at the start of 2018 after a tremendous run in 2017, and no matter which coins you invested in, almost all coins and tokens experienced massive losses. This is an example of market risk.

Coin-Specific (Idiosyncratic) Risk
Coin-specific risk refers to the isolated risk of a single coin or token in the cryptocurrency market, influenced by factors specific to the project itself. If for example, a project experiences a negative event (such as network failure or running away with investors’ funds), then the coin holder that invested in that project will be a victim to the project-specific risk. Coin-specific risk can be reduced through diversification.

The fact is that in the investment marketplace, risks is as much an incentive as it is a red flag.  Conventional financial wisdom states that the higher the risk, the greater the expected returns. It’s no surprise that cryptocurrencies are the riskiest investments you can make.

read more at https://www.facebook.com/groups/poloxchan/
I don’t know why a lot of people keep talking about this diversification, how exactly is that helping? It’s not helping in any way at all. What about those that mistakenly bought a lot of sh#t coins just because they were to practice diversification, at the end they end up as the main losers in everything.

No matter how much you try to diversify your portfolio to avoid loss, when the market drops they all drop together, if you’re lucky, it can only minimize your loss.
Pages: [1]
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!