Making a Crypto Portfolio – What Are the Key Factors?

Cryptocurrency has become a major discussion point in the news and online communities. With the recent boom in popularity of cryptocurrency and its underlying blockchain technology, more people are considering buying parts of this new economy rather than simply using crypto as a form of payment.

The abundance of options available in the market allows you to buy crypto with a credit card, debit card, or digital payment. These also help convert cryptocurrency (fiat) into US dollars for transferring to other payment modes. Thus, you can buy cryptocurrency as per your objectives. 

Also, some people purchase cryptocurrency assets that are different. How to shortlist them from your investment folio? This article gives you an overview of what it means to have a crypto portfolio and how you can use it to your advantage.

Start Small

Owning just a few Bitcoins can be a lot of fun. You can use digital currency to buy anything from a cup of coffee to an airplane ticket. However, you should start small and only invest as much money as you are willing to lose. Smaller investments are less risky and more fun.

Curate a Crypto Portfolio

You have heard that the stock market can be a risky investment, and maybe you wonder whether the same is true for the cryptocurrency markets or not. The answer is a resounding yes! While cryptocurrencies have no bearing on the financial system, they have their own merits. 

Cryptocurrencies are entirely digital, with no physical presence whatsoever. It means that no outside forces can affect its value or security, unlike any other form of currency. However, this system is volatile. So volatile that it gets referred to as “the wild west.” While volatility is usually considered an indicator of risk, you should not let it scare you off from investing in cryptocurrencies. 

If you want to come out on top of crypto investment choices, one of the best things you can do is diversify your portfolio. You can include a range of different currencies and tokens within your portfolio.

Pick a Circumspect Exchange

The world of cryptocurrency is full of dangers. It is a nascent industry that promises new opportunities to those willing to take the risk. It also presents significant challenges and risks to people, inexperienced or does not fully understand what they are getting into. 

As safer investment options such as T-bills, CDs, and savings accounts return less than 1% per year on your money, cryptocurrency is an attractive alternative for generating high-interest income. If you pursue this activity after gaining knowledge, it can be an excellent investment opportunity. However, if not, it can be a very costly learning experience.

What Makes Cryptocurrency So Risky? 

It comes from its decentralized nature as there are no regulations or investor protections to keep the market stable and safe for consumers. Even though crypto has been around since 2009 (Bitcoin), most investors have only recently started taking notice due to Bitcoin’s spike in popularity earlier this year. 

The above has led to large price fluctuations that make day trading a lucrative but risky option for those who are not comfortable with losing much more than they initially invested.

Most people looking into investing in crypto do not have the time or resources available to monitor their investments. The exchange-based portfolios come in handy in such a scenario! 

Instead of having to set up your system for tracking your crypto trades and profits like an active trader would use, all you have to do is sign up with one of these services. You can get back to business as usual while letting them handle the heavy lifting.

Consider a Hardware Wallet

If you are familiar with crypto, you know the most secure way to store your funds is in what’s known as a hardware wallet. These are physical devices designed with security features to ensure they remain safe from hackers. They typically look like USB drives and can be used on multiple devices, from your computer to your phone.

This added protection comes at a price, both literally and figuratively. Hardware wallets can range anywhere from $30-$300 per device, depending on how many features you want. It is important to consider whether or not this is worth it for you based on how much money you will get stored in the device. 

Considering All Options

A crypto market is a volatile place. If you have been following this space at all, there’s no doubt that you already have a basic idea of what cryptocurrencies are and how they work. You also know all about “mining,” which is how cryptocurrency gets created. 

So why are we still talking about investing in cryptocurrency? 

The answer is that it’s important to consider all your options when creating your crypto portfolio.

Over the last few months, we’ve seen everything from massive price swings (to coin values) to hackers stealing millions of dollars via the blockchain and even exchanges shutting down for days at a time. However, it’s not just technical issues in the space that can affect prices. 

There are ideological questions around decentralization and regulation. These can cause Lambo-style price jumps (with coins skyrocketing overnight) and sharp drops, leaving many investors wondering if they saw any real gains.

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