Should I invest in lots of different cryptos or only hold a few?


There are thousands of cryptocurrencies available on the market today. Should we try to hold all of them, or should we only invest in a few? I have been around for 4-5 years, and based on this little time, and especially this latest bullrun, I have made up some thoughts on the subject.

There is a big difference between long-term and short-term!

This is very important to understand and to notice. You might buy a coin short-term, meaning that you buy it now, and sell it in a couple of days, hopefully with a nice profit. That is something else. You can invest in lots of short-term projects, but when it comes to what you hold in your long-term portfolio, then it is something else.

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Bitcoin went from $1 to $60,000

This is important to realize when you invest in crypto. Bitcoin was at $1 once. It isn't that anymore. Imagine if you had only bought 1 single BTC back then and held onto it until today? I guess most of us would be very satisfied about that (of course, we would regret only buying one, but that is a different story).

With this in mind, it might be a fun thing to spend $500 and buy 100 different cryptos for $5 each and then store them in a wallet and then look it up in ten years from now. It could be a cool project.

But, there is a few things that we need to remember when you hold tokens!

You have to pay attention to the tokens you hold.

This is something we often forget about. We just say that you should buy tokens, send them to your hardware wallet (which is safe) and forget about them. I have done that, and normally, it doesn't cause any trouble. But then, sometimes it does. Let us say that the token you bought has moved to a different chain. Normally, they have a certain time in which it is possible to swap the old token to the new token. If you don't pay attention, you might actually miss out on the swap, and your tokens will be worth 0 in ten years from now.

If you store them at exchanges, then you might join in on swaps and so, but then you are in danger if something should happen to the exchange. And believe me, a lot happens in crypto in ten years. Who knows where Binance will be in ten years?!

Lots of tokens with small value

Let us say that you buy 100 tokens, spending $5 on each. Some of this will increase a lot in value and then they will be worth $100. That is a nice interest, isn't it? But, when we enter crypto, we don't dream of $100. We want a Lamborghini, don't we? So, what do we do? We just sit around and wait for our $5 to turn into a lambo. And believe me, that will take a very, very, very long time. Most likely, you will end up buying a toy Lambo instead!

Of course, you might be lucky, but in general, spreading out your money in all directions will cause you to be in profit, but it often feels so "in vain" to take profit of something worth $50 (even though you only invested $5 originally).

Fewer tokens with higher value

This is something I consider to be a better option. Choose somewhere between 1-20 tokens that you follow, that you pay attention to, that you believe in, and that you do some research about. Instead of investing $500 in 100 different tokens, invest $50 in 10 tokens. This will make it way easier to pay attention, and if your $50 investment will increase 20x (which can easily happen), you will actually own $1000 worth of a token, something that feels much easier to take profit of.

The thing is taking profit...

Once again, the reason why I believe it is easier and better to invest in a few tokens with higher sums, is that it is easier to take profit of $1000 than of $50, even though the initial investment increase is similar.

It is also easier to pay attention and to be alert, in case something should happen.

Now I am curious to hear if you agree with me or not?! These are just some thoughts from my head. What do you think? Are you investing in all sorts of cryptos, or are you trying to only hold a few long-term? I would really love to hear about your strategy and your thoughts!


Comments 4


In this case the idea is to have a diversified portfolio. Having several cryptocurrencies of course good projects that have a future allows you to do what is called hedging. If in such a case one of the assets goes down, another one you have in your portfolio goes up and in that way you mitigate the loss.

Financial Markets Analyst.
@lenonmc21

07.05.2021 07:22
0

In this case the idea is to have a diversified portfolio. Having several cryptocurrencies of course good projects that have a future allows you to do what is called hedging. If in such a case one of the assets goes down, another one you have in your portfolio goes up and in that way you mitigate the loss.

Financial Markets Analyst.
@lenonmc21

07.05.2021 07:22
0

I agree with you, focusing on few tokens with some study about them will for sure bring better profit than just investing in many tokens which you can never focus on all of them for sure. Despite I'm doing some short-term investments I'm still looking forward to doing a long-term one when I feel I have the capital I want to start with.

07.05.2021 17:08
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As per my thinking try to invest in good project and just hold tight. Don't invest in bad project first do you due diligence before investing. Currently we can see eth to new high.

08.05.2021 08:28
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