Diversifying your crypto portfolio: focus in on Altcoins
As institutional investors move to balance their crypto holding, over two thirds of private investors are still unfamiliar with cryptocurrencies, according to latest Gallup survey
Many Wall Street experts are carefully monitoring the development of cryptocurrencies while others are outspoken about their cryptocurrency portfolio strategies. Yet the majority of smaller investors still doubt the practicality of digital assets: according to a Gallup survey, 75% of US private investors with stock portfolios in excess of $10,000 consider the investment in Bitcoin as risky, 26% have considered such a purchase, and only 2% of them have already purchased Bitcoin. This lack of interest can be explained by the Bitcoin’s limited appeal: the survey has shown that only 29% of private investors know about cryptocurrencies. Alternate cryptocurrencies, seen as real investment alternatives for those sceptical about Bitcoin, have the potential to greatly increase the range of assets available to crypto-newcomers.
Crypto Fund Research have also gathered statistical data on institutional investment, identifying 407 dedicated crypto funds as well as 221 hedge funds and 171 venture capital funds that work with cryptoassets. 195 funds have invested up to $10 million each in cryptoassets, with only 19 surpassing $100 million. 222 funds are based in the US (more than 50% of the total). According to both studies, a key criterion in constructing crypto portfolios is risk management through diversification. Even seasoned Wall Street experts who invest in digital assets refuse to put all their eggs into one basket. According to basic investment theory approximately ⅓ of any portfolio should be held in low-risk ‘stable’ assets to offset the riskier bets that can potentially bring high-yield returns. In crypto investing Altcoins can do the trick as private investors and specialized funds purchase a variety of Altcoins in small quantities to alleviate the effects of high volatility.
In 2017, one such diversification strategy was presented by Financial Planning Association on CNBC. According to this strategy, an investment portfolio includes the same amount of Bitcoin and Bitcoin Cash. This is a significant fact. This tells us that specialists are projecting further growth of both coins in the nearest future. Many people expected a BCH crisis, but that has not been the case. Allocating a substantial part of the portfolio to these two cryptocurrencies was a wise decision in the long term. In 2018 the situation changed as Bitcoin Cash was replaced by GRAM.
Time will tell how well such a portfolio will work in the long-term. Nevertheless, it is important to split up your investments between different cryptocurrencies. Not all coins will appreciate, but the ones with a solid foundation will eventually prove to be successful. Cryptocurrencies are still in the initial stage of their development, we are definitely going to see more impressive price movements in the coming months and years. We see Thaler as one of the most perspective sector-specific tokens that should be included in diversified portfolios after the Thaler.One token generation event. Investors will get the best of both worlds: the liquidity and ease of use of a modern blockchain technology combined with the proven intrinsic value of prime real estate assets. Thalers will be issued to Crowdsale participants and will serve as both a blockchain functioning as a secure means of payment and the equivalent of shares in an open-ended real estate investment fund.
