If there is one idiomatic refrain that is relevant in the context of investment portfolio diversification, it is unquestionably ‘don’t put all your eggs in one basket.’
While traditional assets such as stocks, bonds, and real estate are generally considered safe investments, asset diversification is what can truly protect an investor’s portfolio. If a single asset class suffers a significant loss or performs poorly, a diversified portfolio with other asset classes to fall back on, rather than to rely solely on one, has the potential to protect you from massive losses.
With the meteoric rise of digital assets over the last decade, cryptocurrencies have taken centre stage, and from an investor perspective, they have been seen to add significant value to portfolios by allowing them to be risk-averse. A well-balanced portfolio of assets is a much safer bet, generating higher returns while reducing losses. Some of the world’s Bitcoin millionaires appear to be leading the way in demonstrating how cryptocurrencies are truly investable assets, which appears to be solidifying the crypto trail.
Why Should We Practice Portfolio Diversification?
We diversify our holdings to protect ourselves from market volatility. Depending on what is going on in the market, different investment instruments tend to perform differently. Having a diverse portfolio of assets means that when some lose value, others may gain value. It is
also possible that the value of all assets will increase or decrease. The goal of portfolio diversification, on the other hand, is to avoid diminishing returns across the board.
It is critical to note that while a well-diversified and well-allocated portfolio seeks to mitigate risk, the ultimate goal is to maximize monetary gain. The general rule is to maximize returns while minimizing risk. A well-diversified portfolio typically consists of a mix of stocks, fixed income, and commodities such as gold and oil. A diversified portfolio in today’s market may include one or more crypto assets, and those cryptocurrencies and crypto tokens should also be diversified.
Benefits of Portfolio Diversification
Risk mitigation
Despite the fact that the crypto asset class is volatile, one of the primary benefits of diversifying your portfolio with crypto is risk reduction. Cryptocurrency, as a digital asset class, has the potential to outperform other stable asset classes in terms of performance. According to research, investing in Bitcoin can reduce overall risk when compared to traditional stocks. Cryptocurrency is establishing itself as a viable alternative investment and is making significant strides in mitigating the risks associated with traditional bonds and stocks.
Immune to inflation
Centralization and increased regulation are a nagging issue that looms over every asset class, particularly the money chain. With the benefit of decentralization, cryptocurrencies as digital assets are immune to inflation and rank second only to gold as a preferred investment option due to their stable inflation rate. They are not directly regulated by government bodies or authorized financial institutions, which helps to eliminate roadblocks common in the banking system. Cryptocurrencies are more resistant to the risks associated with fluctuating price dips due to their open-source and decentralized nature.
Independence
Cryptocurrencies are completely independent in their function because they are a decentralized asset class that is not tied to any single authoritative body. This also implies that cryptocurrencies have a fair amount of value and independence because they do not decline in direct correlation with other asset classes. This alone makes them a significant value addition to a hedged or fully balanced portfolio.
Easy Entry and Exit
Cryptocurrencies have the advantage of allowing for easy entry and exit from the investment market. Unlike markets for other assets, the cryptocurrency market does not require investors to enter the market with a large sum of money. Because everything can be set up quickly online, investors avoid the hassle of paperwork that is typically associated with other investment classes. It only takes a few minutes to set up an online account with a linked wallet to keep track of all your crypto assets.
Delta Exchange offers futures and options on 70+ cryptocurrencies
Delta Exchange is a well-known online cryptocurrency derivatives trading platform that is extremely popular among cryptocurrency enthusiasts. In recent years, there has been an increase in demand for derivative platforms. The Delta cryptocurrency exchange has a one-of-a-kind and cutting-edge user interface that makes trading derivatives simple. Delta Exchange offers derivatives on Bitcoin and more than 70 altcoins which help you expand and diversify your portfolio, which is crucial not just for risk management, but also to help you increase your gains in the long run!
Delta Exchange: The Features
Delta Exchange offers perpetual swaps, futures, and options on bitcoin and over 70 altcoins with 100x leverage. Delta has something for everyone. The following are some of Delta’s characteristics: ● Delta Exchange also offers Yield Farming Strategies and Robo Trading strategies where you invest and earn potential returns over time.
● All derivative contracts traded on Delta Exchange include leverage. The maximum allowable leverage varies by contract but can reach 200x in some cases. This means that if you only have one Bitcoin, you can open a position worth up to 200 Bitcoins.
● Traders can trade derivatives on a single platform in a safe and secure place.
● Delta provides enterprise-level security, and a highly secure firewall protects the platform’s infrastructure. The exchange’s cryptocurrencies are kept in multi-signature
wallets for added security and withdrawals are only made once a day after the manual check is completed.
● Delta offers an appealing referral program and a deposit bonus to its users in order to increase trading volumes on the cryptocurrency exchange platform.
Bottom Line
When it comes to adding value to their portfolios, savvy investors can do themselves a world of good by considering cryptocurrency. Consider how, despite being a volatile asset class, Bitcoin has not demonstrated a remarkable correlation with other traditional asset classes.
When it comes to choosing the best platform, with its simple and user-friendly interface and advanced order types, Delta exchange is one of the best platforms for trading derivatives and cryptocurrency futures.
