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The Best Ways to Diversify Your Cryptocurrency Portfolio in 2022

The Best Ways to Diversify Your Cryptocurrency Portfolio in 2022

These days, cryptocurrency has become one of the most popular investments. Despite its inherent risk, cryptocurrency can offer a high return on investment. If you have invested in Bitcoin but not much else, you may be wondering how to best diversify your crypto portfolio. Here are a few ideas.

Invest in Altcoins

When it comes to investing in cryptocurrency, there are a variety of options available. While Bitcoin remains the most well-known and widely-traded digital currency, there are many other altcoins that can also offer investors potential rewards. In general, altcoins are alternative versions of Bitcoin that offer unique features or benefits.

For example, some altcoins focus on anonymity or privacy, while others emphasize faster transaction times or greater security. As a result, altcoins can offer investors a chance to diversify their portfolios and gain exposure to a range of different cryptocurrencies. Some of the most popular altcoins include:

  • Ethereum
  • Litecoin
  • Chainlink
  • Solana

However, there are hundreds of potential altcoins that you can include in your portfolio.

Purchase Stablecoins

Another way to diversify your cryptocurrency portfolio is to invest in stablecoins. Stablecoins are digital assets that are pegged to a fiat currency or other asset, such as gold. This peg ensures that the value of the stablecoin remains relatively stable, even when the price of other cryptocurrencies fluctuates.

This can offer investors some peace of mind, knowing that their investment is not subject to the same volatility as other digital assets. Additionally, because stablecoins are pegged to real-world assets, they can offer a way to hedge against inflation. Some of the most popular stablecoins include:

  • USDT (tether)
  • USDC (circle)
  • DAI (maker)
  • PAX (paxos)
  • GUSD (gemini)

In the US, Tether is one of the most popular. If you don’t know how to buy Tether, it is a lot easier than it may seem. All you need is to find a Tether USD exchange like Coinbase and buy some of this cryptocurrency with your regular currency.

Invest in Cryptocurrencies on Competing Blockchains

Each cryptocurrency operates on its own blockchain. By investing in cryptocurrencies on competing blockchains, you can further diversify your portfolio and gain exposure to a range of different technologies.

For example, Ethereum, Bancor, and Status are all on the Ethereum blockchain. Cardano (ADA) is a competing blockchain that focuses on scalability and security.

Some cryptocurrencies can operate across multiple blockchains. For example, Wanchain is a digital currency that allows for cross-chain transactions between different cryptocurrencies. This means that you can use Wanchain to transfer value between Bitcoin and Ethereum, for example.

Look into Alternative Crypto Assets

Your cryptocurrency portfolio doesn’t need to be completely made up of just coins and tokens. There are a range of other digital assets that you can invest in, such as:

  • Cryptocurrency and blockchain stocks
  • Cryptocurrency ETFs
  • Grayscale Bitcoin Trust
  • Grayscale Ethereum Trust

These alternative assets can provide you with exposure to the cryptocurrency market without having to directly purchase and manage digital currencies. For example, Grayscale Bitcoin Trust is a trust that invests exclusively in Bitcoin. This means that you can gain exposure to Bitcoin without having to actually purchase and store the currency yourself.

Similarly, there are a number of cryptocurrency ETFs that track the performance of a basket of different digital assets. This can offer you diversification across a range of different cryptocurrencies, without having to purchase each one individually.

Invest in Other Digital Assets

Many other digital assets are becoming popular among cryptocurrency investors. NFTs, for example, are digital assets that can represent anything from a piece of art to a video game item. These assets are stored on a blockchain and can be bought, sold, or traded just like any other cryptocurrency.

Similarly, blockchain gaming and Web3 companies are creating new ways to invest money with cryptocurrency. Digital real estate, online gaming, and non-fungible tokens are just a few of the new opportunities that are available.

Endnote

By diversifying your portfolio across a range of different assets, you can minimize your risk and maximize your potential for returns. If you’re looking to invest in cryptocurrency, make sure to consider all of your options. As always, before investing in anything, make sure to do your due diligence and research what you’re buying as well.


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by Marissa Collins //

Opinions expressed by contributors are their own.