“Cryptocurrency is promising, but please invest with caution”!
– Elon Musk
There are many ways to build and grow wealth within the crypto space. One such way is the habit of having a Diversified Crypto Portfolio.
What is a Crypto Portfolio?
A crypto portfolio is a collection of different investments in different crypto projects and tokens. Does that sound too complex☹? Let’s use a simple example;
Imagine Mr Kingsley has $500 in his bank account and he’s interested in investing it in crypto.
He has two options
Option 1
He can choose to buy just one crypto asset like Bitcoin and hold it in a crypto wallet. At best after a period of 6 months, his investment in bitcoin might have appreciated by say 50% giving him a total of $250 in returns.
Option 2
He can choose to spread his $500 on five crypto tokens thereby having a portfolio comprising of different crypto tokens(tokens A, B, C, D, E). So $100 can be invested in five different crypto tokens. Hence, Mr Kingsley has a crypto portfolio consisting of $500 invested on five different crypto tokens.
Option 2 is a better Move (Diversified Portfolio)
Option 2 is a smarter move than Option 1 because each of those tokens will appreciate at different percentages over a particular investment period.
A good way of investing in crypto is having a portfolio of different coins. Let’s prove this with a look at four different crypto assets over the last year.
A $500 investment spread over cryptocurrencies such as Terra, Enjin, Ethereum and Sol will have returned 20X over a year. Each of these crypto-assets has experienced a significant increase within the past ten months.
Analysis of Portfolio
Terra token has seen a 7163.33% increase in its price value from January 2021. At the time of creating the NFT Synergy portfolio, the token price was $0.90. Currently, the Terra token price is set at $65.37. A $100 investment will have returned $7163.
Similarly, the Enjin coin has seen a 700% increase in its price value over the past ten months. At the time of portfolio development, the token was priced at $0.34. Since then, its value has increased and is now valued at $2.6. Another $100 investment would have returned $700,
Ether has also experienced an increase of 398.14% since the turn of the year. Ether is currently being traded above $4000 per token. As a result, $100 will return $300.
Sol has increased over the last 7 months with prices going from $7 to $200. That’s over a 2000% increase. So $100 will have returned $2000.
In Summary…
A $500 investment spread over these four crypto tokens at the start of the year will be worth around $10000 presently. This marks a 2000% increase in your diversified portfolio over a period of 1 year.
It is evident from this that investing in just a single token limits your profit potentials. A diversified portfolio simply means “you are not putting all your eggs in one basket”.
For example, assuming Mr Kingsley invested his $500 on just Bitcoin, he would have gotten at best a 300% increase in his portfolio. However, splitting his capital on multiple tokens reduces his risks and increased his profit potential.
The moral of the story- Have a diversified portfolio
