Crypto Assets Diversification; The Benefits

Over the last couple of days, the crypto space has witnessed some irregularities and uncertainties: from the UST de-pegging, to the Luna coin being minted excessively and ultimately diluting the price drastically. With all these that happened, I tend to imagine what will become the fate of the people that had all their assets centered just on the coin and the coin experienced a massive dump, it may spell catastrophe for the person. This made me to realize that because the crypto space is not only volatile but uncertain, one needs to diversify their assets through various tokens and/or coins so as to play safe. This brought me to "Crypto Assets Diversification."

One may ask what really does the term "Crypto Assets Diversification" mean. Just as the name suggests, this is a way of distributing one's crypto assets into various cryptocurrencies instead of just concentrating it on one crypto project, so as to limit the risk of losses caused by price action and other factors. In the management of your crypto profile, you should understand that it is always safer to diversify than to "have all your eggs in the same basket."

Crypto Assets Diversification does not only apply to investors or those that buy and hodl for long-term, but it also applies to day-trader. Even while trading, one should take all necessary precautionary moves and that includes diversifying one's trade and assets. Just to let you know, the price of a particular asset can drop in seconds, and if that is the only asset that you are holding, your trade may be hampered a bit because you will be waiting for it to rise to recover your money. But if you have others assets, you can make do with them until the other one recovers.

When diversifying your crypto assets, you should spread as wide as possible through various projects and Blockchains. For example, you may not necessarily base your entire holdings on the BSC tokens, you can also include the ERC, TRC, Sol, and other Blockchains. Sometimes, a particular Blockchain may witness a massive boom and the tokens within that Blockchain may also experience pumps. If your assets include that particular Blockchain tokens, you will also benefit from it.

Benefits of diversifying your crypto assets

• To reduce the event of losses: We have established the fact that the world of crypto cannot be predicted and as such, price of assets can go in any direction even within a short time. If the price of one crypto goes negatively and the coin is the only one you own, it may affect you negatively because your entire portfolio will be down. However, if you also have other assets, there are chances that one or more of them will be doing well or at least, the price will be moving positively. You can use these ones to cover up for the losses on the ones that are not doing well.

• To reduce the effect of crypto scams: Sometimes last year, there was a particular exit-scam that was recorded in the crypto space where a particular project withdrew liquidity and pulled the rug and ran with the investors' funds. Now imagine if one of the investors that was a victim of the rug-pull invested all his funds in that coin only, by now, he would have been devastated. This is one of the reasons you do not have to put your entire investment into just one single coin. Learn to diversify.

• It gives you access to other fringe benefits: I remember a time that a particular project airdropped their new tokens on the holders of their old tokens. Again, some other projects may also distribute their tokens to holders of another related project's token. In the event of these kinds of benefits, you will have a high probability of partaking in it if your assets are diversified to include the tokens/assets required for it. More so, there are some benefits you will qualify for by just holding a particular token. For example, some exchange platforms have made it so that buying cryptos with their native token will give you some percentages off instead of buying with other stablecoin like USDT, BUSD, etc. So you see get to benefit by holding and transacting with that token.

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