Investments in digital assets are considered high-risk due to their volatility. What part of the capital is better to allocate for the purchase of tokens and how to reduce risks at the same time
The opinions of experts may not coincide with the position of the editorial board. topplabs.org does not provide investment advice, the material is published for informational purposes only. Cryptocurrency is a volatile asset that can lead to financial losses.
In the cryptocurrency market, sharp fluctuations in quotes are often observed. For example, on November 16, the price of bitcoin collapsed by more than 10%. A sharp decline in the value of the first cryptocurrency was also observed on September 7. Then the asset fell in price by more than 20% per day. Topplabs.org experts explained how to secure your cryptocurrency investments and make your investments more efficient.
Correct risk assessment
The cryptocurrency market is characterized by increased risk, and the likelihood of losing your funds is high, says Mikhail Karkhalev, financial analyst at Currency.com crypto exchange. According to him, experienced investors and large funds take this fact into account, therefore they allocate no more than 10% of their portfolio for working with digital assets.
“This is a very sensible approach. 10% is enough to feel the profit that cryptocurrencies can bring. On the other hand, the next crypto winter will not hit the portfolio hard if there are only 10% of digital assets in it, ”the analyst noted.
Conservation of funds
If we talk about investing in terms of, first of all, saving funds, then it is necessary to closely monitor the cryptocurrency market and buy more conservative assets, says Maria Stankevich, Development Director of the EXMO crypto exchange. In her opinion, with this approach, the share of digital assets in the portfolio can reach about 30%.
Despite the fact that the assets of the decentralized finance (DeFi) sector are among the most profitable, it is better to refuse to buy such tokens to reduce risks, the expert warns.
“DeFi projects are indeed the most highly profitable on the market today, but the higher the profitability, the higher the risks,” Stankevich said.
Effective algorithm for beginners
For a person who is not a professional trader or investor who is closely immersed in the subject of cryptocurrencies, it is dangerous to invest more than 5% of capital in digital assets, I am sure Cryptorg CEO Andrey Podolyan. According to him, a beginner is especially likely to enter the market at maximum values, as well as to be involved in various fraudulent schemes.
The most effective and proven scheme is the allocation of non-critical amounts for investment, which must be invested in equal shares every month in Bitcoin, Ethereum, Binance Coin or top stocks, Podolyan explained. He noted that such a tactic can bring good returns in the long term and allows you not to spend a lot of time on investments.