Most clued-in investors will always strive for a diversified portfolio across assets to help mitigate variance in the market and enable sustained gains while mitigating losses in a tumultuous market. However, with recent inflation at record highs and Crypto winter setting in, now is more important than ever to have a mix of altcoins, start-up projects, and big players in your portfolio.
Your individual risk tolerance will dictate what the spread of assets will be, with those who search for higher yields to be spread more across start-up and alt projects. Whilst those who are more risk-averse are likely looking to Bitcoin, Ethereum, and your other top market cap coins for a lower, but more likely gain.
Nevertheless, given the state of the market, it’s more important than ever to not spread yourself too thin and protect yourself as institutions exit, covering themselves from margin calls and avoiding the liquidation of assets. As an investor, you should welcome this winter as a chance to stock up on coins at a discount, but be diligent over your holdings and always do your research.
How long can this Crypto Winter last?
While nobody can be certain as crypto is fast-moving, fluid, and open 24/7, the macroeconomic indicators are bleak and you should be prepared for this winter to last a while, with these being a few reasons why.
The reverse repo market for a long time now has constantly been inflated with record highs in May and June. When abnormally high reverse repo figures are seen, this demonstrates a key indicator that there is no confidence in the stock market and institutions do not trust any potential investments, instead they are taking the risk free 0.8% guaranteed for placing the funds with the Fed.
Moreover, many mortgage backed security ETF’s are collapsing with Vanguard’s backed mortgage security ETF dropping nearly 10% during after-hours yesterday. When there is no confidence from institutions and the housing market is approaching collapse this is a clear economic indicator that an downturn is upon us.
Dollar-Cost Averaging Down
While this all may seem like doom and gloom, fear not as for retail investors this is an opportunity to either dollar cost average down in your investments or enter the market at a very attractive, far more palatable price. With the adoption of crypto continuing to boom, many DeFi and Metaverse protocols are pushing paradigm-shifting technology, and the opening of Web 3.0, crypto is not going anywhere.
It is imperative that while your portfolio is probably looking a little red, and green days seeming like gold dust, you should welcome the short-term drop in the market so that you can stock up on your favorite coins and tokens to put yourself in a better financial situation down the line.
A Unicorn to help diversify your portfolio
Investing across early-stage coins and protocols and diversifying your portfolio offers the opportunity for you to be in high-potential projects while minimising the risk. That is why a project such as Logarithmic Finance (LOG) is very interesting and could revolutionise how investing in Presales is conducted.
LOG, which is currently in its own Presale, is a next-generation layer 3 protocol aiming to address the issue of investing in early-stage ventures through their native token, LOG. They will do this by bridging the gap on its consolidated platform, allowing you to purchase pre-IDO/ICO coins across any blockchain network thanks to its cross-chain compatibility.
LOG has further features which help unlock the world of DeFi, with better swap ratios, discounts with certain partnered coins, and boasts strong tokenomics to make LOG an even more attractive investment.
LOG has a maximum supply of 4 billion tokens, with 1.2 billion tokens being included in its Presale. The token is also a community-led deflationary asset, enabling long-term holders to have sustained gains and vote on the burn percentage from staking rewards on the network. Finally, once live, no single entity will manage the ecosystem, it will be governed by its community which in the world of DeFi is key to winning the trust of investors.
Whilst still early on, LOG looks like a good option to include in your portfolio, but this will of course depend on your risk tolerance. If you want to learn more you can check out their website and Litepaper.