Why you should diversify your crypto portfolio

diverse crypto portfolio

Date Published

01/24/2019

When first getting started in crypto mining, it’s easy to get particularly attached to a single form of coin. Maybe you want to lean on the long-term reliability of bitcoin, or maybe the recent buzz of ZCash or Litecoin attracts you toward investing all of your resources into one of those two camps. Whatever the case, isolating yourself too largely into one form of cryptocurrency is a formula for limited success and potential failure. Here are the main reasons you need a diversified crypto portfolio in order to reap the largest profit for your mining efforts.

Minimize your risk

Whether you’re investing in the stock market or in cryptocurrency, there is always going to be some form of risk associated with your initial investment. One of the aspects of crypto that makes it so enticing to investors is its potential for massive spikes in the price of a coin, but this also means there is plenty of potential for seismic decreases, as well. By diversifying your portfolio, you effectively equip yourself to handle this inherent volatility and to still turn a profit even when one or more of your investments is not performing well.

Increase your opportunity for returns

When you enter the market with a diversified portfolio, your initial investment is spread out across a varied range of cryptocurrencies, increasing your chance of reaping rewards when one or more of your coins sees a sudden increase in value. In a scenario where your entire investment is tied up in Ripple, you’d be forced to watch from the sideline while the price of ethereum climbs and leaves you in the dust. A diversified portfolio simply spreads out your opportunity for success and helps you benefit from any overall progress in the market.

Types of coins to consider when diversifying

When diversifying your crypto portfolio, there are several altcoins that provide a strong investment opportunity for miners to take advantage of. Ethereum is one of the most popular altcoins on the market today, due largely to the fact that contracts can be executed without any downtime, fraud, or interference from a third party. Litecoin has also been on the uptick of late thanks to its speed and ease of acquisition, both of which are designed to atone for some of bitcoin’s shortcomings. What’s best for your crypto portfolio will ultimately depend on your goals and on your unique situation, but it is important to strive for a balance between low-risk, moderate-risk, and high-risk coins to give yourself the best chance at success.

Mining colocation with Compute North

Compute North provides industry-leading mining colocation services to help investors and miners make the most of their large-scale operations. The long-term potential of a diversified portfolio is maximized through the high-power and low-cost capability of a professional colocation facility. Contact us today to start getting the most out of your mining efforts.

Please note that this post does not explicitly endorse or recommend any particular strategy or form of cryptocurrency. For specific investment advice, please contact your financial advisor.

Date Published

01/24/2019

Author

First Scribe

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