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The crypto-currency market, or crypto-assets, abounds with opportunities to generate higher returns than those provided by traditional financial markets.
But this ecosystem has its peculiarities: high volatility, numerous and not always serious projects, and fundamentals that are complex to grasp.
We therefore feel it’s important to explain how you can build up a coherent, balanced and diversified portfolio to get off to a good start in cryptocurrency investing.
Create a crypto wallet is the first step in buying, selling and managing cryptocurrencies.
This wallet can be physical or online.
It’s an environment in which the user stores all his cryptos in the form of private keys.
This means they are the only ones who can access them to store them or carry out transactions.
Security is paramount when it comes to virtual currencies, as these are data that are vulnerable to hacking.
There are many different types of wallet, also known as crypto wallet.
While security is the main criterion, the choice then depends on the preferences and needs of each user.
In this issue, we won’t be talking about the ideal crypto wallet to store keys, but of the strategy to adopt when choosing cryptocurrencies.
In 2023, there will already be almost 12,000 virtual currencies on the market, including the best-known ones such as Bitcoin and Ethereum.
Knowing which ones to choose can be complicated.
Whether it’s crypto or stock market assets, trading is all about strategy.
Building your crypto investment portfolio properly, however, is essential to getting the best returns, without putting yourself at risk.
Many crypto investment strategies are possible.
How you manage your assets depends first and foremost on your investor profile, your expectations and the risk you’re willing to take.
Read on to find out how to choose the right strategy. breakdown of a crypto portfolio.
There are as many strategies as there are investors, but several general trends can be identified.
To choose the best crypto strategyThere’s no need to rush.
In addition to must-haves like Bitcoin, the choice of cryptocurrencies available on the market is vast. For investors ready to diversify further, there are currently around 20 000 cryptocurrencies.
But then the choice is trickier.
First of all, you have to distinguish between serious projects and scams.
While the number of cryptos is growing rapidly, not all of them are attractive in terms of investment.
The projects behind them may lack seriousness, correspond to a more specific target, encounter various problems that can rapidly slow down their adoption. Before investing in a crypto, it’s important to be well-informed, and not to be charmed by every attractive-looking project. For this, a good understanding of market fundamentals and active monitoring are essential.
Several questions need to be addressed before including a project in an investment portfolio:
We have a dedicated market research team that provides this type of analysis. this type of analysis to save you precious time in building up your portfolio.
To minimize risk, consider only projects in the top 100 of the crypto market or with a capitalization of at least $500 million, to rule out any liquidity problems.
There isn’t just one type of cryptocurrency, but several within the ecosystem.
Each has different characteristics.
They allow you to diversify your investments.
This is essential for creating an effective crypto portfolio.
Diversification helps limit overall losses when an asset suddenly loses value.
It also allows you to take advantage of the crypto bull market.
Every day, new projects are emerging to meet ever more diverse needs.
Some have already emerged as leaders in their respective sectors.
Here is a non-exhaustive overview of the major project families in today’s ecosystem:
The cryptocurrency ecosystem is now vast. To facilitate this task of strategic portfolio balancing, we offer turnkey products, including these “balanced” or “offensive” asset portfolios which are aimed at investors seeking higher performance on high-potential projects, but willing to accept a greater risk of volatility.
Should you diversify your portfolio or not?
Diversification, like concentration, has its advantages and disadvantages.
Benefits of diversification :
Disadvantages of diversification :
Advantages of a concentrated portfolio :
Disadvantages of a concentrated portfolio :
In 2023, the market remains highly concentrated around Bitcoin and Ethereum.
They alone account for a large a large part of its capitalization, even if other cryptos are gradually gaining ground.
Si les cryptomonnaies sont connues pour être des actifs volatils, Bitcoin et Ethereum le sont moins que les projets peu capitalisés.
Ainsi, ils restent les deux projets les moins risqués à détenir en portefeuille, comparativement à l’ensemble du marché.
Since 2020, institutional investors such as banks and investment funds have been positioning themselves in cryptocurrencies, mostly using specific financial instruments such as derivatives (e.g. Grayscale) or futures.
The majority of investments by these players are concentrated on Bitcoin and Ethereum, as these are the securities whose technology is recognized and which offer sufficient liquidity.
These players bring volume to the market and have a growing impact on price trends.
Bitcoin should be treated with caution, however: since the end of 2021, its price has experienced several significant declines.
While it remains a popular, even must-have crypto, as well as a safe-haven asset, it sometimes experiences spectacular declines.
Those wishing to invest in Bitcoin need to have strong nerves.
Reserving at least 50% of your crypto portfolio in Bitcoin and Ethereum can therefore be considered reasonable.
The more risk-averse who wish to limit excessive volatility can even increase this share to 75% of the portfolio.
We offer three asset portfolios to our customers.
Among them, a “Core” wallet composed exclusively of Bitcoin and Ethereum will meet the expectations of investors wishing to take their first steps in this ecosystem.
Cryptos can be very profitable, but they are also highly volatile.
To secure investments, incorporating a share of stablecoins into your portfolio is an interesting solution. Stablecoins are crypto-assets whose value is backed by a fiat currency such as the dollar or the euro. The most popular is Tether (USDT.)
Stablecoins have several advantages, including:
They should be considered as part of a dynamic portfolio management approach.
At times when you feel that the market could be heading for a downward trend, incorporating a greater or lesser proportion of stablecoins into your crypto portfolio will enable you to preserve all or part of your capital gains.
To this end, we offer a “defensive” portfolio to minimize the impact of falling prices.
Why use a stablecoin rather than reselling your crypto-assets for euros?
Quite simply because returning in euros requires you to pay taxes on your capital gains, which is not the case if you use EURL.
Investing in cryptos presents risks.
To best manage your investments, it’s essential to implement an effective cryptocurrency strategy.
Building a balanced cryptocurrency portfolio is an exercise that requires knowledge and time.
Diversification is essential, both to mitigate the risk on your portfolio, but also to go for better performance than can be achieved with a 100% Bitcoin portfolio.
Diversification must be meticulous, to avoid one-off projects whose value plummets once the hype wears off.
As a first step, a novice investor may prefer to divide his portfolio between the must-have cryptos, such as Bitcoin and Ethereum, while occasionally incorporating a share of stablecoins, in order to benefit from the tremendous potential of cryptocurrencies while sparing himself the greatest risks of volatility.
With Coinhouse’s Premium account, crypto will no longer hold any secrets for you.
Tailor-made support, to bring you all the knowledge and advice of our experts so you know everything there is to know about crypto and master your investments.
The Coinhouse premium account includes exclusive weekly content, regular training and webinars, live initial training to master all the crypto basics, and frequent appointments with your account manager to manage your portfolio.
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Investing in crypto-assets carries risks of liquidity, volatility, and partial or total capital loss. Crypto-assets held are not covered by deposit and securities guarantee mechanisms.
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Coinhouse SAS with a capital of €210,000, RCS Paris 815 254 545, headquarters: 14 Avenue de l'Opéra 75001 Paris – support@coinhouse.com. Registered with the AMF for activities related to the purchase/sale of digital assets against legal tender, the exchange of digital assets for other digital assets, and the custody of digital assets for third parties under the registration number: E2020-001.
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