Experienced crypto investors will often look to more than just bitcoin and seek to build a portfolio containing other cryptoassets too.
The most well-known of these alternatives is ethereum, but crypto portfolios will often be far broader than holding just this and bitcoin.
In investing, diversification and spreading your risk is important, and in investment terms that means holding crypto as part of a wider portfolio including other assets too, such as stocks, bonds and cash.
But for those interested in zooming in on the solely crypto element of a wider investment strategy, we speak to eToro crypto analyst Simon Peters to ask how he would go about building a portfolio.
Experienced crypto investors will often look beyond just holding bitcoin
Why look at other cryptoassets beyond bitcoin?
Not all cryptoassets are intended for use as currency, some are designed to be solutions to decentralised projects and services.
Aside from the technical capabilities that differentiate some crypto from bitcoin in their intended utility, many of these cryptos have much smaller market capitalisations (the total number of the assets, multiplied by current market price of a single asset) and as such have the potential to see far higher percentage returns than investing solely in bitcoin due to the lower capital inflows needed to move prices.
However, investing in smaller cap cryptos generally comes with far higher risk as equally with the lower liquidity prices can fall just as quickly,…