On September 27th, 2022, Shark tank’s Kevin O’Leary tweeted about his strategy for investing in the crypto market. Kevin is known for giving such advice to crypto investors through different platforms, and many investors take his advice seriously. He wrote that he has invested in 32 different coins and tokens and called this strategy is Diversify Strategy.
Diversification of the portfolio is not a new phenomenon in the market. Many investors and stock exchange experts have climbed the success ladder with this strategy in business. But the question is what diversification is and how many assets, coins, or tokens you need to invest in leaping forward in the crypto market.
What is diversification?
Diversification is a phenomenon in which investors divide their crypto assets into different crypto coins or tokens. The investor’s overall portfolio remains the same in the crypto market; however, to reduce the risk of overexposure to a single asset, the investor divides their portfolio.
Benefits of a diverse portfolio
There is a considerable investment risk in the crypto market because no matter how expert you are, you cannot tell about the near future of a coin. And if a coin or token crashes, and you have invested all the money in that one asset, your money is doomed. Investing in different tokens and coins reduces that risk of investment.
The more you invest in different coins and tokens, the better. But the question is how much you should invest and how many tokens and coins?
Diversification of portfolio in different coins and token
As Kevin stated that he has invested in 32 different coins and tokens to diversify his assets. But you do not need to do the same if you are not Kevin. Diversification of portfolios is different for different investors. However, it is a must for all to avoid any risk. You can invest in five to six different tokens and coins if you are a small investor.
And if you are a prominent investor, you can invest in many assets, depending on your wallet. There are different types of tokens and coins available in the crypto market. These tokens include payment tokens, utility tokens, security tokens, governance tokens, basic attention tokens, gaming tokens, and non-fungible tokens. Each of these tokens has a very potential future.
Investing in any of these, alongside some big coins, would give you enough return soon. It will increase your income and reduce potential disaster risk to your wallet.
Pros
Many stock exchange and crypto experts like Kevin are using this strategy of diversifying their portfolios because it has a lot of pros and benefits. Some of which, related to the crypto market, are given below.
Lower risk
No one knows when the crash hits a particular coin or token. Investing in a single asset increases the risk of losing your money. If you have invested in different assets, it will lower the risk of a tragedy to your wallet during a bearish market.
Experience
Investing in different assets will increase your exposure to different assets, and you will know more and more about the crypto market. That is a bonus point for you. The more you learn about different tokens and coins, the more you will have experience.
Rebalancing the portfolio
Diversifying is the name of rebalancing your portfolio. Let’s suppose one of your assets gains so much that it overshadows the rest of the coins, and you can then divide the gain on the rest by buying process. And this is the key to Kevin’s strategy, balancing your portfolio.
Final thoughts
Like Kevin, most experts and investors are using the Diversification method to increase their wealth in different business sectors. Kevin himself accepted that he learned diversification from Stock and applied that in Crypto
Source: https://www.cryptopolitan.com/kevin-advice-for-investors/