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Investment portfolios are the real need of investors, and while cryptocurrency is the hot trend, it should be a part of your portfolio.

The cryptocurrency market is gaining traction and people are speculating a huge surge in the market in the coming few years. Previously, it was usually used to buy goods and services online, but now, since it has attracted institutional and individual investors, people have started seeing it as an investment tool. 

It is safe to say that cryptocurrency investments have become a crucial part of portfolios. In this article, you will learn how much crypto your investment portfolio should contain and what you should do to keep it balanced. 

Let’s talk about the framework you should set for your portfolio before you invest in cryptocurrencies.

When it comes to investing in cryptocurrencies, the risk and volatility levels increase. Hence, you should develop a proper strategy for evaluating possible assets. Investing in cryptocurrencies is similar to investing in other types of assets, but you need to look at the following factors:

1. Specific Product Functionality: The cryptocurrency that you are investing in should have a proper functional niche. You could research if it is a product that has one-of-a-kind functionality.

2. Adoption Rate: The cryptocurrency should have a proper community and devoted user base.

3. Technology: The cryptocurrency should use an innovative technique to solve problems. Ask if they use technology that is both intriguing and defendable.

4. Governance: You should check if your cryptocurrency is governed and if the incentives provided to investors are systematically aligned. 

5. Cryptocurrency Market Opportunity: Before investing in a specific cryptocurrency, look up to their market value and capitalization. 

As well you must examine the following factors before developing an investing strategy:

• Your financial status at the moment.

• Your willingness to take risks and the amount of money you want to make.

• A metric for determining how effective your investing approach is.

• Adaptability to various market conditions. 

What proportion should be given to cryptocurrency in your portfolio?

The most popular and large cryptocurrencies by market capitalization are Bitcoin and Ethereum. Ethereum and Bitcoin are considered as a legitimate and a distinct asset class by institutional and individual investors. 

Most of the experts of the market, such as Michael Kelly, Theresa Morrison, and Vrishin Subramaniam, think that cryptocurrency should be a part of every investor’s portfolio, and it should be up to 5% of the overall portfolio. 

Cryptocurrencies are a new asset class that offers better rewards while also carrying a larger risk. They're becoming more popular throughout the world, and they're now at a point where you should include them in any future safe portfolio you have. When you first start, you may allocate up to 2% of your whole portfolio to cryptocurrency and gradually raise the percentage over time. 

You can buy Ethereum and start your cryptocurrency portfolio right now with the minimum and then build it slowly. 

Along with cryptocurrencies, fixed deposits, gold, real estate, and even cash can be used to balance the investment portfolio. To put it another way, your crypto capital is the amount of money you can afford to lose. You are not worse off when volatility strikes you on the downside if you limit the riskier asset to a minimum.

However, there are some things to keep in mind while adding cryptocurrency to your portfolio.

1. Protect your Private Keys:

You need to protect your keys to prevent yourself from getting scammed or hacked. Your private keys are your way to access your cryptocurrency. If you lose them, there is no way to access your cryptocurrency. 

Never leave it on a computer or tell it to anyone. You can write it down and keep it locked in a safe place. Don’t trust anyone with your private keys.

2. Don’t be hasty:

FOMO (Fear of Missing Out) is real but never let it get on your nerves. Most cryptocurrencies launch with great hype and promotions by celebrities which can cause a large number of investors to invest in because of FOMO. 

You should never make decisions based on such fake endorsements. Proper checking of the facts and market value should be done. 

3. DYOR:

DYOR means Do Your Own Research, and this is very important. Never let a friend or a social media post trick you into investing in a fake or useless cryptocurrency. Doing your own research will allow you to comprehend and compare different market situations, different cryptocurrencies and their value, and it will enable you to make better decisions based on your knowledge. 

4. Diversity:

Diversity is the first thing you need to look out for when investing in cryptocurrencies. Always try to diversify your investment portfolio so that you don’t lose everything at once. 

When building your investment portfolios, you can buy Ethereum, Bitcoin, Ripple and other cryptocurrencies in a balanced way to achieve maximum profits. Even in case of loss, you won’t lose everything at once.