A famous crypto debate you'll often hear is whether you have a highly concentrated portfolio; focusing on just a few coins. Or should you have a well diversified portfolio with many coins. There are both positives and negatives and what is right for me or someone else may not be right for you. I often get the question about; "How many coins should I invest in?" Or "please take a look at my portfolio and tell me what you think". Many times I will see that this person has invested in 20 or more coins. But is that the right approach? Let's talk more about that.
As I have just mentioned before; each person will have their own preferences and appetite for risk and this will greatly influence the way they have to make decisions while investing. Everyone knows that if you have a portfolio with a higher concentration, then you also have a greater opportunity for greater gains. But at the same time there is a greater chance of missing out on other coins that are appreciating. Do you want to aim for the bigger profits or do you want to have a greater chance of having a coin that appreciates in value. This is something everyone in crypto should ask themselves. Not just in crypto, but in the general world of investing.
I firmly believe that where you are in your crypto journey should greatly influence which investment strategy is better for you. For someone just starting out and investing a small amount of money; it would be much better to have a more concentrated portfolio. If you are only investing a few hundred dollars, but they are divided into several coins. Even if those coins go up, you won't have as much profit. At that point, it would be better to put your money into one or two coins to have more concentrated gains. I think this remains true even until you invest several thousand dollars in the market. Not only will you see higher profits, but it will also help you accumulate much faster. If you only invest a few hundred dollars a month in cryptocurrency, but it is split between 10+ coins. You'll be buying a lot of nothing. On the other hand, if you put that into just 1 or 2 coins, then you'll start to build it up to significant holdings if you keep doing it for a good period of time. That's been my approach right since I got into the market. For a few years I focused only on accumulating bitcoins and ethereum. You want to build a foundation for your portfolio that you can rely on. Fortunately, I was very lucky and had a very nice portfolio. I attribute this mostly to the strategy above. In fact, it was only recently that I decided to finally start the 3rd and 4th pillars of my portfolio by adding two new coins. The coins I decided to add were Polkadot and Solana. I invested heavily in both during the summer price drops. It took me years to feel comfortable enough with my bitcoin and ethereum holdings to branch out into different coins. If you've been following me for a decent amount of time, you'll know that one of my biggest crypto passions is being able to make my crypto work for me and earn passive income. By having a larger concentrated portfolio, it also helps maximize the amount of passive income you'll be able to earn. Then compound it on a monthly basis while adding to it with spot purchases; you'll be amazed at how quickly your portfolio can grow. By having a larger concentrated portfolio, it also helps maximize the amount of passive income you'll be able to earn. Then combine it on a monthly basis while adding to it with spot purchases; you will be amazed at how quickly your portfolio can grow. By having a larger concentrated portfolio, it also helps maximize the amount of passive income you'll be able to earn. Then combine it on a monthly basis while adding to it with spot purchases; you will be amazed at how quickly your portfolio can grow.
Now, on the other hand, why would it be better to have a diversified portfolio? There are many reasons for that as well. It's always been thought that having a well-diversified portfolio will help protect you from risk. Right now, I don't think that's true in the cryptocurrency market. After all, everything pretty much moves just like bitcoin moves. In fact, altcoins tend to fall a lot more when bitcoins also fall. But that brings us to the real reason that is enticing so many people to diversify their portfolio. And that reason is that altcoins tend to grow much faster on a percentage basis compared to bitcoin. There are a few people who want bitcoin or ethereum but think they're too expensive already. Therefore, they buy these other coins hoping that they will rise and eventually convert them to either bitcoin or ethereum. This is a great strategy if you are able to define it correctly. I've even done this myself in the past. I got into Cardano at $0.03 and also Polkadot (the first time) when it was $2.80. I would later convert them to both bitcoin and ethereum after they went up significantly. For many people, investing in cryptocurrency is like buying a lottery ticket. There are regular stories of coins making 100x, 500x and even 1000x or more. If you get lucky and put a decent amount of money into one of these coins, it could completely change your life forever. This is the reason Dogecoin and Shiba Inc have become so popular, along with all the other dog coin ads. But it's not just a lottery. There are actually a lot of great projects. After all, I reinvested in Polkadot this year. Just think if you had entered Solana when it was $3 at the beginning of the year. These are the profits we all dream of. Best of all, this is a project that potentially has a great future ahead of it. If you do some research and find some fantastic projects, I highly recommend investing in them. But always remember that the cryptocurrency market is very young. Look around the top 100 coins with market cap today, in ten years most of them will be gone. By diversifying your portfolio, you increase your chances of having a coin that sees a large valuation or goes parabolic. Just think if you were in Solana when it was $3 at the beginning of the year. These are the wins we all dream of. Best yet, this is a project that potentially has a big future ahead of it. If you do some research and find some fantastic projects, I highly recommend investing in them. But always remember that the cryptocurrency market is very young. Look around the top 100 coins with market cap today, in ten years most of them will be gone. By diversifying your portfolio, you increase your chances of having a coin that sees a large valuation or goes parabolic. Just think if you were in Solana when it was $3 at the beginning of the year. These are the wins we all dream of. Best of all, this is a project that potentially has a great future ahead of it. If you do some research and find some fantastic projects, I highly recommend investing in them. But always remember that the cryptocurrency market is very young. Look at the top 100 coins by market cap today, in ten years most of them will be gone. By diversifying your portfolio, you increase your chances of having a coin that sees a large valuation or goes parabolic. But always remember that the cryptocurrency market is very young. Look around at the top 100 coins by market cap today, in ten years most of them will be gone. By diversifying your portfolio, you increase your chances of having a coin that sees a large valuation or becomes parabolic. But always remember that the cryptocurrency market is very young. Look around at the top 100 coins by market cap today, in ten years most of them will be gone. By diversifying your portfolio, you increase your chances of having a coin that sees a large valuation or becomes parabolic.
Even today, this is a debate I always have in my own head. Which approach is better? Personally, I like the more concentrated approach more. I like that it allows me to accumulate faster and also get higher passive income and profits. I didn't actually start thinking about diversifying into bitcoins and ethereum until my portfolio reached over $100,000. So what is the right of coins to have? It's all up to you. But it should definitely be a number that you are able to keep up to date on all of them. If you find it overwhelming and can't do it, then you have too many coins. Right now I only have 4 coins in my portfolio, but I'm always on the hunt and looking for the next great opportunity. That's the bottom line. Regardless of which approach you decide to take, you should always keep an open mind and look outward for the next great opportunity. If you're not looking, you'll definitely never find it.
What about you? How many coins do you think a crypto portfolio should have? Do you prefer highly concentrated or highly diversified portfolios?