Most people believe cryptos are just huge bubbles but the truth is this happens simply because of a lack of knowledge. The only real problem with investing in cryptocurrencies is the really large volatility noticed in the market.
Those that follow blockchain and crypto news websites, like Cryptoext, know that variations of thousands of dollars are normal for the top cryptocurrency, Bitcoin. With this in mind, it is hard to know how much of the investment portfolio should be allocated to any cryptocurrency. Fortunately, there are always ways in which you can assess the situation. If you are interested in cryptocurrency investments, remember the following.
Do Start Small
In this case, small basically means anywhere between $100 and $500. When you use smaller amounts you get used to the relatively new industry. You start to understand trading, transferring and storing crypto coins. It is easier to analyze and choose crypto signal services and comfort is increased. After you are more comfortable and you learn more, you can invest more. In the meantime, your portfolio might have already increased in value.
The main reason why you should start small is that storing and moving cryptocurrency is not like with regular investing and online banking. A small mistake can lead to money losses and you need to know what hurdles to expect.
Respect The Golden Rule Of Risky Investment
You want to treat cryptocurrency investments as high risk investments. This practically means you should not invest more money than what you afford to lose right now. If you wake up tomorrow and all your cryptocurrencies have zero value, it should not have an impact on your overall investment portfolio.
Bitcoin And The Rest
Besides the fact that you need to decide how much to invest from your total portfolio, you need to decide how much of the crypto investment portfolio to put into a specific cryptocurrency. The one where most of the money should be put is definitely Bitcoin. Even if the current price is down, it is still the crypto that has the best possible potential in the future.
While most of the cryptocurrency investment portfolio should be put into Bitcoin, you have to consider others because there are occasional huge value increases that happen. For instance, Ethereum went up 3,500% leading up to June 2017 in just 6 months. Those that invested then got a huge return.
Basically, based on personal preference, investors recommend you hold between 30 and 70 percent of your entire crypto portfolio in the very popular Bitcoin. Other assets make up the rest.
The last thing that should be mentioned is that cryptocurrency investments are only really recommended for those that can deal with the high volatility that exists at the moment. If you can deal with losing portfolio value of up to 50% in a day, only to then potentially get it back, it is something you can consider. If not, it is better to either start much smaller than what you believed or to avoid cryptocurrency investments altogether.