Thread by @TheGemHunters

(Beginner Level)

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🧵A rarely touched topic, yet arguably one of the most important ones for any investment beginner: Portfolio Diversification

Before you even start investing you should go into yourself and understand what you’re expecting and what you’re willing to risk.

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After that you’re ready to formulate a diversification plan suited for you. Follow our thread to learn what it means👇

Diversifying your crypto portfolio means spreading your investments across a range of different projects.

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This helps to reduce risk and increase potential returns. In other words, don't put all your eggs in one basket! #InvestingStrategy

Why is it important to diversify your crypto portfolio? Because the crypto market can be extremely volatile.

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Prices can fluctuate rapidly, and individual coins can crash or soar in value. By diversifying, you can reduce your exposure to any one coin or market sector.

Here are three examples of portfolio diversification for different risk appetites:

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1️⃣ Conservative: A portfolio mainly consisting of high-cap crypto projects like $BTC, $ETH, and $BNB (just examples). These are generally less volatile and more established investments.

2️⃣ Balanced: A portfolio with a mix of low, mid, and high-cap crypto projects.

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This approach balances stability with potential growth opportunities. Make sure to allocate smaller potions to the mid and Smallcaps.

A example of that would be something like:

• 50% highcaps
• 35% midcaps
• 15% smallcaps

Potentially mix in a few % for Degen plays.

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Aggressive: A portfolio focused on small-cap and a few mid-caps. This approach is more high-risk, high-reward.

Small-cap projects have the potential for explosive growth, but they also carry a higher risk of failure. This approach requires extensive research & strategy.

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In summary, diversifying your crypto portfolio can help reduce risk and increase potential returns. Choose a diversification strategy that aligns with your risk tolerance and investment goals. Remember to do your research and stay up-to-date with the crypto market.