A large number of investors have started to purchase cryptocurrencies as a short-term and long-term investment, a safe haven asset and an experimental investment to develop a proper understanding of the market and the technology behind cryptocurrencies such as Bitcoin.
As a result, even the initial coin offering (ICO) market, which is yet to showcase a viable product or a decentralized applications with an actual active user base, have begun to attract hundreds of millions of dollars in the past few months.
In fact, Tezos, Bancor and EOS, the three largest ICOs to date, have raised more than $485 mln, with the ICOs of EOS and Tezos still ongoing. However, none of these three ICOs have completed the testing phase of their software, leading many analysts to describe the ICO market as a bubble.
Still, the vast majority of investors in the cryptocurrency market are purchasing cryptocurrencies such as Bitcoin, Ethereum, Litecoin and Ethereum Classic as long-term investments.
A large portion of investors within the cryptocurrency market wholly support the monetary policy, vision and purpose of popular cryptocurrencies that have evolved into useful alternative financial networks and decentralized infrastructures for decentralized applications.
What is a balanced cryptocurrency portfolio?
As mentioned above, the purpose of investing in cryptocurrencies varies greatly for investors. Most Bitcoin investors consider Bitcoin as a safe haven asset and a digital currency and have purchased Bitcoin expecting it to become a major alternative financial network which could compete with global banking systems and reserve currencies such as the US dollar in the far future.
If an investor remains unclear about the structure, purpose and monetary policies of certain cryptocurrencies and is investing in specific cryptocurrencies as an experimental investment to learn more about the market and various cryptocurrencies, it will be smart decision to maintain a diversified portfolio of a few different cryptocurrencies.
Investment tip from Andreas Antonopoulos
On June 13, Bitcoin and security expert Andreas Antonopoulos revealed his personal investment strategy in establishing a balanced portfolio of crypto assets. Antonopoulos wrote:
“Yes, I own a few different crypto assets as part of a small but diversified portfolio. I only risk as much as I'm willing to lose.”
The latter part of Antonopoulos’ statement is what most investors in the cryptocurrency market fails to consider. The entire cryptocurrency market is still at an early stage, and most cryptocurrencies remain extremely volatile. Hence, investors should not be investing more than they are willing to lose, especially if their investment is experimental and speculative.
Also, it will be beneficial and efficient for investors to utilize platforms such as Cyber Fund’s cryptocurrency portfolio builder Satoshi Pie, which allow investors to track their investments in real time in terms of change in value and performance against other assets.
This way, investors can remain in control over their portfolios and establish a balanced portfolio of cryptocurrencies and assets.
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Brilliant post. Your image condenses a lot of complex finance theory into 5 easy points. That makes a great intro for people starting out and an awesome reminder for those with a bit of background knowledge.
If I had to order your list by importance, I'd go with: 3, 2, 5, 1, 4. The crypto space is chaotic but to the extent I can pick likely winners and losers, I try... but i don't have a crystal ball so maintaing diversity protects my portfolio.
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