Diversifying Your Crypto Portfolio with Asset Categories

Started by PrimoPierotz, Aug 03, 2022, 02:43 AM

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PrimoPierotzTopic starter

To competently organize a diversified crypto portfolio, investors have access to various types of tools and platforms. It's important to decide whether to work alone or with professionals, but keep in mind that finance mistakes in asset allocation can lead to bankruptcy.

 The complexity of diversification lies in its implementation, so calculating the diversification factor is key. One option is to use Macroaxis and a crypto exchange to manually select tokens and simulate portfolios daily. Another option is to use OSOM's Crypto Autopilot algorithm, which chooses from over 200 crypto assets based on various indicators and offers a diversified portfolio to minimize drawdowns.

Understanding the risks involved in crypto investing is crucial, including market volatility, regulatory risks, and potential technological vulnerabilities.

If you don't have time for extensive research, a mixed strategy could be a viable option. This might involve using a combination of automated tools and professional advice to help you diversify your crypto portfolio.
By using these resources, you can take advantage of the benefits of both approaches without having to invest the same amount of time and effort as you would if working alone. It's important to remember that diversification is crucial in helping to mitigate risk and maximize potential gains.


In cryptocurrency, it's crucial to use stop orders and accept partial deposit losses to avoid losing the entire deposit.
By selecting crypto projects from various regions, you can broaden your exposure to different crypto business developments.

However, it's important to steer clear of projects located in countries where crypto is restricted or banished; instead, focusing on areas where innovation is thriving can be more beneficial.


That is, this software, which used to be called "expert system". It contains rather complex algorithms, but like all "advisors" in the exchange business, it has a weak correlation between the complexity of the program and its profitability. How about every 15 minutes issue forecasts for 2.5-5 years ahead? :-\
Although, I agree - for planning the near future, this software can be very useful.


One of the most common mistakes in preparing a crypto portfolio is being overly aggressive, driven by excessive confidence or impatience for quick returns. A lack of understanding about the cryptocurrency market can also contribute to misplaced confidence. While diversity is important, an overly-diversified portfolio can be just as detrimental if it's difficult to manage and maintain.

Rebalancing is crucial to ensure that assets stay balanced and avoid overexposure to any one investment. It's important to understand what you're investing in and why, focusing on fundamental technologies with long-term viability. Exploring public cryptocurrency portfolios, such as those held by bloggers and large investors, can help you gain insight into their investment choices and refine your own strategy.


Working alone requires extensive research and monitoring of the market, but it gives you more control over your portfolio. Tools like Macroaxis and crypto exchanges can be used to manually select tokens and simulate portfolios. This approach allows for personal customization and tailored decision-making.

On the other hand, working with professionals or utilizing automated tools can be beneficial for those who don't have the time or expertise for in-depth research. Automated algorithms, such as OSOM's Crypto Autopilot, can utilize indicators to select assets and offer a diversified portfolio.

Of course, it's crucial to understand the risks involved in crypto investing, such as market volatility, regulatory risks, and potential technological vulnerabilities. Being aware of these risks can help in making informed decisions.

A mixed strategy, combining automated tools and professional advice, can be a viable option for investors who want to save time while still benefiting from expert guidance. This approach allows for a balance between convenience and personalized decision-making.

Diversifying your crypto portfolio with asset categories involves allocating your investments across different types of cryptocurrencies or crypto assets. This strategy aims to reduce risk by spreading exposure to various sectors within the crypto market. Here are some common asset categories to consider:

1. Large-cap cryptocurrencies: These are well-established cryptocurrencies with large market capitalizations, such as Bitcoin (BTC) and Ethereum (ETH). They generally have more stability but may offer lower growth potential compared to smaller-cap assets.

2. Small-cap cryptocurrencies: These are lesser-known or newer cryptocurrencies with smaller market capitalizations. Smaller-cap assets can be more volatile but may offer higher growth potential. Examples include projects like Cardano (ADA) and Chainlink (LINK).

3. Platform tokens: Platform-based cryptocurrencies represent blockchain platforms that offer decentralized applications (DApps) and smart contract functionality. Ethereum (ETH) is a prime example, but other examples include Binance Coin (BNB) and Polkadot (DOT).

4. Privacy coins: Privacy-focused cryptocurrencies aim to enhance user privacy and anonymity. Examples include Monero (XMR) and Zcash (ZEC). Including privacy coins in your portfolio can provide additional diversification.

5. Stablecoins: Stablecoins are cryptocurrencies pegged to the value of another asset, typically a fiat currency like the US dollar. These offer price stability and can act as a hedge against crypto market volatility. Some popular stablecoins include Tether (USDT) and USD Coin (USDC).

6. Decentralized Finance (DeFi) tokens: DeFi tokens represent projects that aim to disrupt traditional financial systems through decentralized applications. Examples include Compound (COMP), Aave (AAVE), and Uniswap (UNI). Investing in DeFi tokens allows exposure to the growing decentralized finance sector.

7. Niche or specialized cryptocurrencies: These are cryptocurrencies designed for specific use cases or industries, such as gaming (e.g., Enjin Coin), supply chain (e.g., VeChain), or healthcare (e.g., Solve.Care). Including niche cryptocurrencies can provide exposure to unique market segments.

8. Exchange tokens: These are tokens specific to certain cryptocurrency exchanges, often used for discounts on trading fees or as a utility within the exchange ecosystem. Examples include Binance Coin (BNB) and Huobi Token (HT).

9. Oracle tokens: Oracle cryptocurrencies provide external data to smart contracts on blockchain platforms, enabling them to interact with real-world information. Examples include Chainlink (LINK) and Band Protocol (BAND).

10. Interoperability tokens: These tokens aim to facilitate communication and interoperability between different blockchain networks. They seek to solve the challenge of disconnected blockchains. Examples include Polkadot (DOT) and Cosmos (ATOM).

11. Non-Fungible Tokens (NFTs): NFTs represent unique digital assets, such as artwork, collectibles, or virtual real estate, that are stored on the blockchain. They have gained significant popularity recently. Examples include CryptoKitties, NBA Top Shot, and Decentraland.

12. Energy-efficient cryptocurrencies: As environmental concerns grow, energy-efficient cryptocurrencies that use less power in their consensus mechanisms are gaining attention. Examples include Cardano (ADA), which uses proof-of-stake (PoS), and Nano (NANO), which uses directed acyclic graph (DAG) technology.

13. Cross-border payment tokens: These cryptocurrencies focus on efficient and low-cost cross-border transactions. Ripple (XRP) and Stellar (XLM) are examples of cryptocurrencies that aim to improve international remittances.

14. Venture capital tokens: Some projects offer tokens that represent investments in early-stage startups or venture capital funds. These tokens can provide exposure to promising projects before they gain widespread adoption.

15. Governance tokens: These tokens are associated with decentralized governance protocols that allow token holders to participate in decision-making processes and vote on proposals. Examples include Maker (MKR) and Compound (COMP).

16. Security tokens: These are tokens that represent ownership or shares in real-world assets, such as real estate, company stocks, or commodities. They aim to bring traditional financial assets onto the blockchain. Security tokens offer exposure to regulated and compliant investment opportunities.

17. Gaming and virtual world tokens: With the rise of blockchain-based gaming and virtual worlds, investing in tokens associated with these platforms can provide exposure to the growing gaming industry. Examples include Axie Infinity (AXS) and Decentraland (MANA).

18. Social media and content creation tokens: These tokens are used within platforms that incentivize content creation or social interactions. Users can earn rewards for creating and sharing content. Examples include Steem (STEEM) and Hive (HIVE).

19. Synthetic assets: These tokens represent the value of real-world assets, such as stocks, commodities, or fiat currencies. They enable users to gain exposure to traditional financial assets without directly owning them. Synthetix (SNX) is an example of a protocol that offers synthetic assets.

20. Blockchain infrastructure tokens: These tokens are associated with projects that provide fundamental infrastructure for blockchain networks, such as scalability solutions, layer 2 protocols, or cross-chain interoperability. Examples include Ethereum Layer 2 projects like Polygon (MATIC) and cross-chain platforms like Chainlink (LINK).

21. Decentralized storage tokens: These tokens represent investments in decentralized storage platforms, where users can securely store and retrieve data. Examples include Filecoin (FIL) and Sia (SC).

22. Privacy-focused platforms: These are blockchain platforms that prioritize privacy and anonymity. Investing in privacy-focused platforms can provide exposure to projects that aim to enhance user privacy. Examples include Monero (XMR) and Zcash (ZEC).

23. Cross-chain bridges: These tokens belong to projects that enable interoperability between different blockchains, allowing assets to be seamlessly transferred across multiple networks. Examples include Ren (REN) and Wanchain (WAN).

24. Internet of Things (IoT) tokens: These tokens are associated with projects that aim to connect physical devices to the blockchain, enabling secure and decentralized communication and data sharing. Examples include IOTA (MIOTA) and VeChain (VET).

25. Decentralized Identity (DID) tokens: These tokens are related to projects working on decentralized identity solutions. They aim to give users control over their personal information while enabling secure and efficient identification processes. Examples include Civic (CVC) and SelfKey (KEY).

26. Renewable energy tokens: These tokens represent investments in projects focused on renewable energy production and sustainability. Investing in renewable energy tokens allows you to support green initiatives within the crypto space. Examples include Power Ledger (POWR) and SolarCoin (SLR).

27. AI and Machine Learning tokens: These tokens are associated with projects leveraging artificial intelligence and machine learning technologies within the blockchain ecosystem. Examples include SingularityNET (AGI) and Cortex (CTXC).