Don't Put All Your Eggs in One Basket
As in all markets, one minute to the next is unpredictable in the cryptocurrency market. Many cryptocurrencies, which reached very high profitability rates in the past and were thought to never lose anything of their value, have disappeared, and many will continue to disappear in the future. Just as Bitcoin loses value against the US dollar, altcoins also go through the same process. In the event of a possible collapse in Bitcoin, if you allocate a portion of your portfolio to popular altcoins such as Ethereum, Litecoin and Ripple, you will face serious losses in dollar terms.
In 2015 and 2016, when Bitcoin was trading at $300, many investors were trading in altcoins to earn more Bitcoin. Bitcoin was expected to reach even higher price levels in the future. (Pygmalion effect) However, many investors have reduced the number of Bitcoins in their wallets by trading with altcoins over the past years.
Of course, we cannot ignore that they made significant gains in dollar terms. Bitcoin's growth has benefited not only Bitcoin but also altcoins. Although Bitcoin has an important place as the main asset in the cryptocurrency market, you should not ignore the dollar value of your portfolio. Always try to see the bigger picture, cryptocurrencies are just one of the options you can invest in. Apart from this, you can also evaluate traditional stock markets, real estate, bonds and many other investment opportunities. Thus, you distribute your investment risk between your cryptocurrency portfolio and other investment instruments you prefer.
-CryptoPotato
