How to Minimize Risk in Your Crypto Portfolio

 Never putting all of your eggs in a single basket is good sense in many different parts of modern life, particularly in investing. This is why diversification is a common approach to any sort of investing. To minimize risk in your crypto profile means diversifying, but that is not as simple as it sounds. Though risk management in other areas of finance are relatively straightforward, experts rightly point out, "Technically, diversifying away risk in a crypto-only portfolio could be difficult." It's one of the things no one tells you about investing in crypto.  Before we get too far ahead of ourselves, though, let's consider options and how they can be used to help investors of any level minimize risk in your crypto portfolios. Diversify your investments in cryptocurrency.  As mentioned, Bitcoin and Ethereum dominate, but a two asset portfolio is a foolish one at great risk for loss. "If two assets in the same portfolio move in the same direction, then gains in wealth will be greater and losses more severe." Thus, savvy investment means building a portfolio with negatively correlated options. This is how and why there are substantial challenges when attempting to minimize risk. If the price of Bitcoin sharply declines, as an example, it is commonly believed that there are few other cryptocurrency assets (altcoins) that will not follow. Thus, it is a highly volatile method of investment to choose options correlated directly to the value of Bitcoin. There are altcoins that are set to boom in 2018. This can minimize risk in your crypto portfolio measurably. As one expert has said of this method, "portfolio diversification gives you the opportunity to receive profit from the whole market growing and not depend just on having faith in one coin…. You can make different portfolios (for example, high-risk, average, low risk) and receive profit that will be “averaged” on risk type.” How? It is not as complicated as many like to make it seem. Here is our simplified suggestion. First, overweighting in the known and proven entities such as Bitcoin and Ethereum is great. As the leading blockchain company in the cryptocurrency market, Bitcoin is slated to be a consistent earner, with deviations of no more than 168%. The newest and smallest coins have the greatest ability to grow, and 'cheap' coins have a lot of room to move up. If those coins are backed by solid teams addressing a real market problem (or if they’re manipulated by a small group of people continuously), then it’s not surprising that they can produce the biggest returns." What this shows is that you can minimize risk in your crypto portfolio by using a venture capital approach over a classic stock or market investment approach. However, it would take research to uncover the ideal runners.