Why Crypto Rookies Should Consider a Bundle Approach to Investing
Let’s face it: not everyone has the knowledge and expertise to select the top-performing coins for investment. During such a booming market, there is no shortage of cryptocurrencies available. If you’re a beginner, this dilemma is amplified — leaving you to making several decisions before finding the coin which is best-fitting for your expectations. Instead of trying to pinpoint one coin that you think will generate the highest returns, it’s much safer and more beneficial to take a bundle approach to investing.
Long-term Growth Potential
When entering the world of cryptocurrency, you may be confused about which coins are the best investments. Naturally, you may want to stuff all of your eggs into one basket and follow the hype being generated for specific cryptos… like Bitcoin. If you have recently entered the crypto space and decide to invest in only one currency, you could soon see the value of your assets fall during a price drop. Considering the volatility we’ve seen from popular coins — especially the top five coins in terms of market capitalization, it’s not the best idea to invest in only one highly rated coin.
Instead of trying to search for that 10X, 100X, 1000X return in one month, act reasonably and diversify your portfolio for the long-term. Newbies should consider investing in multiple coins simultaneously to have the best chance of earning high returns over a more extended period — especially if the market continues to perform as it is currently. With thousands of altcoins to choose from, it is possible to grow your investment by dividing and allocating your available funds. This method of investing will boost the odds of growing your wallet.
Although the performance of Bitcoin serves as a precursor for many other altcoins’ performance, it’s crucial to understand that each coin can move against the market. Just like with stocks, the crypto market will always have its fair share of the day’s biggest gainers and losers. While Bitcoin and the other top coins usually move in accordance with each other, many other altcoins fluctuate independently.
So when you’re just entering the world of cryptocurrency and still learning how the market works, the best thing you can do for your investments is to spread them out over several coins based on factors like market capitalization, price, and performance. Allocate your portfolio in such a way that no more than half of your assets fall into one coin or one type of coin. Instead, try to find a solid, stable balance of lower-tiered coins which could potentially spike at any given time — even if the top coins are down.
The Fastest Way To Learn
One of the most important reasons for beginners to take a portfolio approach to investing is that it’s the quickest way to learn how the market works. By introducing cash positions for different coins across the market, you can learn about how each sector performs and distinguish high performing coins from those that lack any genuine potential. The best way for beginners to become experts in crypto is to get involved in more than one sector of the market, again based on several factors like price and market capitalization.
As you continue to follow the news and perform due diligence on the coins in your portfolio, you will soon understand the benefits of keeping your assets diversified over different coin varieties. Once you get comfortable, you might begin to diversify and adjust your portfolio with various coins which you believe will earn the highest returns over time. The key to becoming a crypto expert is reading the market from all angles, not just from the perspective of the top coins.
With all the hype surrounding successful coins and popular cryptocurrencies, it makes sense that one may be unaware of the smaller coins making notable moves in the market. In fact, the biggest investment mistake that amateurs make is to dump all their money into one popular coin without researching first. Always DYOR. After all, would you rather say you’re investing in Bitcoin or some random altcoin that nobody has ever heard about? This is the most critical mistake that rookies will make.
In closing, remember to be smart, make rational decisions, DYOR, and understand that taking a bundle approach to your investment portfolio may be the most profitable thing you can do when entering the realm of crypto.