I just wanted to share a little guide to diversifying in crypto and building a portfolio that is not only safer than throwing darts and chasing every pump but still focuses on a broad spread hitting the different sectors of crypto.
Identify the different sectors of the crypto space to ensure you are getting exposure to the full potential of the bull market. Firstly let’s look into a few main categories that are probably worth paying attention to, but first off, I’m not suggesting or recommending any of these coins mentioned below, they are simply examples to help you identify the categories.
Payment Solutions – Bitcoin, Litecoin, XRP etc
Smart Contract Platforms – Ethereum, Solana, Avax, Cardano etc
DeFi – Uniswap, Curve, Pancake, Lifinity etc
Gaming – Enjin, Gala, Sandbox, Illuvium etc
Ai – Render, Fetch, Singularity etc
etc etc
There are more sectors and even sub sectors to some of these but we aren’t going to bother going that deep right now, that’s for you to do your own research. It’s important to understand that certain sectors can pop off at different times as metas change mid cycle, timing these concentrations can be critical in capitalising on the multiples they offer.
Don’t go heavy into one sector, make sure you dip your toes into the full scope and research different coins in different sectors that you think may do well next cycle. Paying attention to tokenomics and emissions/inflation can affect supply and demand which will be a huge factor into its performance. Active teams and communities on social platforms and user base is something often overlooked but is very important to expand network effect.
Safer sectors would be the Smart Contract Platforms and Payment Solutions as they have both been adopted well as a staple and necessity for the crypto ecosystem to survive, these will be safer bets but also less chance of crazy multiples, consider these your bluechip portion of a portfolio.
DeFi is probably the next biggest when it comes to liquidity but often tokenomics are terrible and rely purely on speculation and locusts like liquidity as the money flows from one to the other. This takes more monitoring but can still deliver good returns. This sector would be considered moderate risk in your portfolio.
Gaming is super hit and miss, again often bad tokenomics but we have seen these things explode from speculation when the meta is present, so you need to stay plugged into this space and what’s “hot right now” or you will miss the optimal entries and be buying tops.
Ai has potential to be the next big wave in crypto and I’m expecting to see an explosion of new metas come from opportunists finding ways to sticky tape a token to Ai technology and you know damn well these will run hard from speculation on the hot new sector.
Both Gaming and Ai I would consider higher risk as they are likely to be more hit and miss and less chance of having long lasting network effects or becoming staples in the crypto space, these would make up a smaller portion of your portfolio.
This is a pretty basic overview and obviously there is a lot more to constructing a bullet proof and high performing portfolio, but I will tell you that it requires a lot of time researching different metrics to find not only safe plays but hidden gems yet to explode.
I might publish more of a deep dive article into the different sectors soon, but for now I hope you enjoyed this information.
Peace
