Here's How to Build a Crypto Portfolio Based on Your Risk Tolerance

By Voyager's Charlotte Siller, provided exclusively to Benzinga Cryptocurrency.

Any financial market is subject to volatility but, unlike the traditional financial market, volatility can be leveraged as a major upside in crypto. Although the crypto market is inherently more volatile, it is this same volatility that breeds a new level of opportunity for investors. Basically, if volatility is lemons, the crypto market provides investors a place to make lemonade.

So, how can you leverage this volatility to build a crypto portfolio that aligns with your financial goals? First, let’s look at why the crypto market’s volatility is so notable.

Why is the Crypto Market Inherently Volatile?

Unlike the traditional market, the crypto market is subject to major fluctuations in asset prices. This is a result of the market being decentralized, meaning it doesn’t have the same guardrails set in place as traditional financial markets. For example, trades can be made at any time on the blockchain — there’s no closing bell, and trades are instant. This allows investors unparalleled access to the cryptocurrency market, leading to a reframing of how financial portfolios are built.

Rethinking How We Think of Risk

While risk is often synonymous with losses or negative aspects of the market, crypto is changing the way risk is incorporated into one’s investment strategy. For example, when assets dip in price, it creates an opportunity for investors to buy at a lower price. Crypto investors call this buying the dip, or buying up a currency at its lowest value. This allows for low-risk investing with a chance at high returns, as well as broader accessibility and equality among investors.  

Choosing the Risk Level That’s Right for You

1. Low risk

If you’re looking for the lowest risk on your crypto investment, stablecoins are the choice for you. These digital assets are pegged to fiat currencies (US dollar, etc.) and therefore aren’t subject to the same market volatility. These assets are growing increasingly popular, particularly amongst governments looking to implement crypto into their economic strategy as currency. Some stablecoins even offer rewards on investment platforms, like USD Coin (USDC), which earns 9% annual rewards on Voyager.

2. Medium risk 

Some cryptocurrencies with high market volatility can still have qualities that could make them look more like medium-risk assets. For example, ol’ reliable Bitcoin is known for massive dips in the market, but its finite availability and long-standing prominence in the market can bolster or balance out the risk.

3. High risk

Just as it would be in any market, the highest risk you can take is with something unknown or just starting out. Remember, people put money into Bitcoin in 2009 when it was just a seed of an asset. Now it’s a tree with dozens of branches — DeFi, stablecoins, smart contracts, etc. — and unlimited possibilities for growth. 

If you want to infuse a little risk into your portfolio, you can invest in cryptocurrencies that are just starting out in the market. Always do your research before investing in new projects — read the white paper, learn their mission and understand their purpose.

Helping you Find (and Grow) your Balance

Building a diverse portfolio is important and exciting for investors. That’s why Voyager offers over 60+ digital assets, ranging across the many sectors of crypto, for you to choose from. You can mix and match till you find the portfolio that works for you and earn rewards just for holding. 

Get $50 in Bitcoin when you sign up using code ZING on Voyager, deposit at least $100, and make your first trade. You can also earn up to 12% annual rewards when you maintain a minimum monthly average of any eligible asset in the app.

Find your crypto balance on the Voyager app.

About Voyager

Voyager Digital Ltd. (CSE:   VYGR;   OTCQX:   VYGVF;   FRA:   UCD2) and its subsidiaries (“Voyager”), is one of the fastest-growing, publicly-traded digital asset platforms in the United States. With over 60 digital assets, featuring a wide selection of altcoins, Voyager offers a secure way to trade using its easy-to-use mobile application. Voyager uniquely offers users the ability to earn annual rewards for maintaining a minimum balance in more than 30 different digital assets. Voyager was founded in 2018, to bring a more transparent and cost-efficient solution to trading in digital assets. Through its subsidiary Coinify ApS, Voyager provides digital asset payment solutions for both consumers and merchants around the globe. To learn more about the company, please visit https://www.investvoyager.com. Use code ZING during app sign up and get $50 in BTC after depositing $100 and making your first trade.

Voyager Cryptocurrency Risk Disclosure

Investment Advice Disclosure: This content is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for digital assets, sectors, or future price movement predictions.

Photo by Alesia Kozik from Pexels

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. The content was purely for informational purposes only and not intended to be investing advice.