Bitcoin underwent a slump in fortune at the outset of COVID-19, but since then it has recovered in great fashion and is experiencing renewed interest. It's safe to say that the time for investing in the cryptocurrency has never been riper.
Whether you’re a novice or an advanced Bitcoin trader some important strategies can help you establish yourself in the cryptocurrency world and climb new heights. From diversifying your portfolio to allocating your assets, find out more you can do to turn up the heat.
Research the Market
Bitcoin offers the promise of a massive return on investments. This tempts people to invest without planning and forethought, which is a grave mistake on their part. You can land yourself in serious trouble with this kind of game plan.
In the case Bitcoin experiences a towering fall, it might take you along with it to the deepest financial bottom. Moreover, there’s always the risk of a scam when things are done on a whim. You have to remember that the Bitcoin market is highly volatile and requires extreme caution to navigate safely.
Here are some things you can do to research extensively on Bitcoin and stay up to date with its changing winds.
- Reading the white paper
- Specialized discussion forum
- Using Twitter
- Join Telegram, Discord or Skype
- Google Searches- Find Online Reviews, Reddit, Steemit, etc.
Remember, you must always perform your own research. You can’t rely on the findings of others. It’s essential to develop a personalized opinion about cryptocurrency and pave the way for forming your own cryptocurrency philosophy.
Allocate Bitcoin as your Primary Asset
The strategies for allocating the crypto market are vast and sundry. The basic pointer is heightened allocation in the cryptocurrency you’re interested in. If this happens to be Bitcoin, you should allocate it maximum percentage in your cryptocurrency portfolio.
You can also rebalance your holdings by selecting your preferred cryptocurrencies and assigning a monthly percentage to each of them.
Diversify Across Market Cap
To improve your risk-aversion, your crypto-portfolio needs to have a healthy mix of cryptocurrencies. This is like how stock portfolios are developed to have a balanced proportion of blue-chip and non-blue-chip stocks.
Even if your priority is Bitcoin investment, you should always have a safe backup in the form of low-cost cryptos. In the scenario Bitcoin experiences a sudden fall, your low-cost cryptos will swoop in and minimize your financial damages.
You need to understand how bitcoin fits into a well-diversified portfolio. As a general recommendation, allocate 50% of your crypto portfolio to Bitcoin, and 25% and 15% to medium and high-risk altcoins respectively. Bitcoin also gets the largest share because it's considered low risk compared to other options. The rest of the 10% can go to — what the Crypto-world calls as “moonshots” that bear a low market cap and high-risk factor.
Similarly, if low-value tokens and coins experience a rise in values, you’ll be in pole position to benefit from their change in fortune.
Never keep all your eggs in one basket — that’s the basic premise of this tip.
Diversify Across Industries
Here again, diversity is the best policy. As Bitcoin is still a relatively new market, it’s hard to prophesize its trends. Which industry will be more of accepting of this new technology? No one can answer that question with utmost surety.
To prepare for uncertainties, it’s advisable to invest in a range of industries to widen your tolerance to risk.
Furthermore, even when investing Bitcoin in a diverse mix of industries, you should consider investing additional capital in your favorite organizations.
For example, if the next few years will see a surge in interest in file storage, you can invest in Filecoin and Storj. Or, if you think the age of VR is upon us, you lean your cryptocurrency portfolio towards High-Fidelity - HFC, Virtual Universe - VU Token, and Staramba.
Tracking Your Crypto Portfolio Gains and Losses
Keeping track of your portfolio is also important to keep yourself in the loop. Some companies use spreadsheets, such as those found in Microsoft Teams and Google Docs, for this purpose. But, they’re not as effective as a dedicated cryptocurrency portfolio tracking app like Delta and Blackfolio.
Make sure you get an app, which provides a platform to buy Bitcoin directly and a personal portfolio space to stay informed on your return on investments.
To build and manage a killer cryptocurrency portfolio, you need to devise a solid strategy and philosophy to approach the world of Bitcoin. First, you must lay down the brickwork and perform thorough research on reliable platforms. Then, you must diversify your portfolio according to market cap and across industries, to increase your risk-tolerance and give yourself a proper chance at making it big. Lastly, you must keep track of your portfolio to make sure you don’t stray into the dark and lose track of things.