The World is Not Just Bitcoin: Why Diversified Cryptocurrency Portfolios Are the Trend in Investment

In the world of cryptocurrencies, Bitcoin is the most well-known face, but experienced investors know that to mitigate risk in a market as volatile as crypto it is essential to build a diversified portfolio. In 2018, Bitcoin's annualized volatility was close to 90%. In 2023, it is 65%, a decline of more than 26 points in just 5 years.

To understand the origin of volatility we must go to the reasons why each cryptocurrency has value. The price of Bitcoin fluctuates influenced by supply and demand, investor and user opinion, government regulations and even sentiment expressed in media and social networks. In essence, Bitcoin has no value other than what the market gives it. But the market is offering solutions and investors are getting some varied investment portfolios so as not to suffer big losses.

Options Beyond Bitcoin

Global data show that the most traded stablecoins are USDT (Tether) and USDC, both pegged to the US dollar. In addition to these alternatives are the new generation cryptocurrencies that are backed by real assets and are therefore more stable than those based on supply and demand alone. Unicoin is backed by real estate, totaling more than US$1.3 billion, and shares in companies with the potential to reach a valuation of US$1 billion. In addition, it offers the opportunity to directly exchange real estate for cryptocurrencies and pays in unicoins 140% of the amount at which the property is appraised. these opportunities can be an option for real estate investors who want to make a switch to assets with greater liquidity or exchange properties that have not had the expected return.

Tips for Building a Diversified Crypto Portfolio

A diversified cryptocurrency portfolio is built with different types of cryptocurrency, with different use cases and risk levels and this depends on the investment goals.

The option of buying in the top 20 cryptocurrencies with good market capitalization is for those who wish to have a modest return on investment and lower risk. Of course, exceptions to this strategy are stablecoins, which are designed to maintain the same price because of their parity with fiat money and therefore would not yield a profit.

The second option depends on usage. There are payment cryptocurrencies that offer fast, low-cost payments anywhere in the world; decentralized financial platforms (DeFi) offer blockchain alternatives to traditional financial services; there are coins to power blockchain-based video games; others offer untraceable transactions. A couple from each category can be purchased to explore their possibilities.

And you can also diversify your portfolio by dedicating a percentage to cryptocurrencies with ample growth potential, but not just any coin. In the example of Unicoin, it is a cryptocurrency with backing, it reports publicly, its creators are not anonymous and it is focused on transparency.

There are many different ways to achieve a diversified portfolio and it is not something that is achieved in a day. Everyone must do their own research and set their own objectives, the important thing to remember is to never put all your eggs in one basket.