If you invest in cryptocurrencies, you have your preferences. You have a preference for Bitcoin, Cardano, or Ethereum. Nevertheless, this article will give you some basic rules to secure your investments. And that means diversifying your crypto wallet!

Why do you need to diversify your crypto portfolio?

When investing in cryptocurrencies, one of the most important things you can do is diversify your portfolio. By investing in a variety of different cryptocurrencies, you can minimize your risk and maximize your profit potential. We recommend only wagering up to 10% of your wallet on a single cryptocurrency. You should ideally hold at least 20 different cryptocurrencies to diversify your crypto portfolio.

Investing in multiple cryptocurrencies also allows you to hedge against market volatility. If the value of one cryptocurrency decreases, you can always take advantage of another one that increases. Also, be careful to avoid betting on cryptocurrencies that are all based on the same ecosystem. For example, a crypto like Avalanche recently launched Avalanche Bridge to promote full interoperability with Ethereum. Therefore, in the event of a fall of the ETH, Avalanche will be primarily impacted.

READ MORE: How to choose the best wallets for cryptocurrencies

Invest in what you understand.

It’s good to diversify your crypto wallet. But it has to be done well. Indeed, far too many people consider cryptocurrencies to be betting. However, this is not the case; it is a financial investment. We recommend that you only invest in cryptocurrencies whose principles you understand. Warren Buffet said that we invest correctly only when we buy for ourselves (not in the logic of resale).

READ MORE: Can You Trade Cryptocurrencies Without Having Access to the Account Holder’s Wallet?