There is a significant increase in the cryptocurrencies and digital tokens from the second half of 2017. A large number of people are interested in ICO investments, but they don't have a clear idea regarding how to build a successful crypto portfolio. Presently, the total market cap of cryptocurrencies is $276 billion.
Bitcoin and Altcoins are almost similar to stock and commodities. When you invest in stocks and their price increases, then you earn the profit. When prices decrease, you lose money. However, cryptocurrencies are too volatile as compared with stocks. If you want to invest in cryptocurrencies, then you should think of building a solid investment portfolio. By building a strong portfolio, you will be able to earn the profit in long run.
There are 1,500+ registered altcoins in the crypto space. All the altcoins are developed to solve issues using blockchain-based technologies. Here, some of the altcoins will be very much useful after 10 years, while some will disappear in 2020.
Before building a cryptocurrency portfolio, you should have knowledge of the things listed below:
1. Top crypto exchanges for bitcoin investor
2. How to secure crypto coins using a safe crypto wallet
3. Basic Crypto Portfolio tools
Most of the crypto portfolio investors invest in 3 cryptocurrencies. The investors have clear that investing in just one coin contains a lot of risk. Even though the coin is popular like bitcoin, there are 100% chances that altcoins can pass the league.
Important factors for building Crypto Portfolio
1. Research
This is the most important point. Always do your own research. Various coins are more or less backed by crazy investors whose main aim is to increase money into the coins and then leave them for the profits. Hence, you should do detailed research on the coin.
Firstly, check the team who has built the coin and their rewards before you invest in the coin. Know which industry they are targeting and go through their whitepaper.
Never invest in a coin, until and unless you get its main goal. You might think that top 10 crypto coins are best, but the main truth is, not all of them will remain at the top position for a long time.
One of the most important point, projects with low scalability will find it difficult to rank in the near future. However, projects with low fees can handle more scalability and reach higher ranks.
2. Diversify
All the cryptocurrencies are meant for different purposes. For instance, bitcoin is similar to fiat currency and can be used to purchase goods and services. While Ethereum is used to build decentralized apps.
From the investor's point of view, you should invest in both the currencies equally. If the price of any of the currencies decreases, then other remains in the league.
Thus, while building a crypto portfolio, you should diversify into different coins. By doing this, it will reduce your risks in the highly volatile market and helps you to earn more profits.
3. Conviction in the coins
Holding cryptocurrencies is the main policy. Just think of the bitcoin investors who have purchased it at $10 and they still own the coin today.
Conviction in the coin is the most important factor for any investor. Thus, you should never invest in a coin in which you have no confidence. Do thorough research on the coin and if you are confident about its expectations then hold it for an as long time as you can.
4. Follow Trends and Act accordingly
Investing in cryptocurrencies is like a roller-coaster ride. You never know what's going to happen next. Always check what upgrades are done by the specific cryptocurrency.
If some coins value is increasing continuously, then invest more money in it. If some coins value is decreasing continuously and you feel that it will have no profit, then sell it immediately.
5. Logical Decision making
Last but not the least important factor is the ability to think and act logically. The industry is highly volatile, hence you should maintain a balance in investing.
Never invest because others are investing. Only invest if you find long-term profit. If you want to dump a coin, then check its projects and then make a decision.
Conclusion
Cryptocurrencies are getting unusual growth in 2018. Some cryptos are losing their value daily. If you want to invest in cryptocurrency, then build a successful portfolio. To do this, research a lot and then diversify your portfolio effectively.