With an ever-increasing supply of cryptocurrencies on the market, deciding which of them to buy is no easy task. In this article we will analyze different perspectives to make the best decision. Knowing the starting point
There are plenty of reasons to acquire cryptocurrencies, however, we all start from different places, so it is natural -and recommended- that everyone defines which strategy is the one with which they feel most comfortable.
What is the chosen investment horizon? An investment designed for the short term is not the same as another designed with a much larger time frame. This is also important to keep in mind when defining which cryptocurrency to buy.
What is the plan? Having planning is crucial to making good financial decisions. A plan gives us guidance, determines concrete goals and ways to achieve them.
It is not the same to buy cryptocurrencies using the DCA strategy, than to bet everything on the new meme cryptocurrency that recently came on the market and is sponsored by some celebrity.
What is my financial profile? Knowing our personality is a key aspect to take into account. Our aversion to risk, for example, will largely delimit which will be the best strategy that suits our needs.
How much information do I have? Knowing where the money is being invested is a prerequisite. The better we know the different alternatives offered by the various assets, the more tools we will have to make a better decision. Deciding the way forward
It is impossible to create a single crypto portfolio that adapts to different personal needs, however, examples can be put together that serve as a reference.
The important thing is not so much the exact composition of a portfolio but to understand what are the fundamentals that support the different compositions. It is critical to understand that it is always about striking a balance between the risk we can tolerate and the gains we seek to make.
With this in mind, we can see how different profiles translate into different portfolios. The different compositions may not even involve all our money, but perhaps simply the money we are willing to invest in cryptocurrencies. First alternative:
- 50% stablecoins
- 25% Ethereum
- 25% Bitcoin
Perhaps one of the most recommended variants, this option focuses on a positioning on firm foundations, being that half is composed of stable cryptocurrencies and the other half is divided into the two most robust and important protocols in the industry today. Second alternative:
- 25% Bitcoin
- 25% Ethereum
- 20% Stablecoins
- 30% Layer 1 Alternatives
In this second version, something more diversified, it gives rise to smart contract platforms that seek to compete on an equal footing with Ethereum, such as Solana, Polkadot, BNB Chain or Cardano. Third Alternative
- 25% Bitcoin
- 25% Ethereum
- 50% Layer 1 Alternatives
In this last option, we are facing a somewhat more aggressive selection that bets on smart contract platforms decisively. Both in this and in the previous one, it is not necessary to distribute among all of them, but it is necessary to know in depth the characteristics of those that end up choosing.
The ability to invest these currencies and generate more returns should not be over mentioned, since it can enhance any type of portfolio, regardless of its composition.
Whatever option is decided, the most important thing will always be to adjust to our needs and have a concrete action plan. Training and knowing in detail what each asset offers will always be the right way to decide how to protect our money.
“We warn that cryptocurrency trading can be risky and may not be suitable for all users. It is made known that cryptocurrencies are not backed by any government entity.”
