A diversified cryptocurrency portfolio that employs different growth methods may seem a complex approach, but it can be a path towards a prosperous portfolio for many more individuals with the right strategy.
These are the key areas we’d consider to build a healthy portfolio.
Staking: By holding onto certain cryptocurrencies and thereby supporting their network operations, you can gain rewards. These can include a more-than-modest Annual Percentage Yield (APY), and the required effort is relatively small.
Crypto Savings Accounts: Interest-bearing accounts for holding cryptocurrencies are offered by some centralized platforms and often offer more modest APYs than staking, but a reasonable rate nevertheless. Some platform risk is involved.
Yield Farming: By providing liquidity to decentralized exchanges it is possible for you to earn higher APYs, but the volatility and risk increases considerably. Interest rates, fees and the cryptocurrency’s performance all influence the returns on this much riskier strategy, which also requires a far greater commitment to active management and monitoring.
Bitcoin and Ethereum ETFs: Somewhat more traditional vehicles, Exchange-Traded Funds for the major cryptocurrencies can offer the best of both worlds. Exposure to the biggest coins through the stock market and relatively straightforward and hassle-free to handle, the perceived lower risk inadvertently means lower returns but with a more stable set of parameters.
Lending: Possible across decentralized and centralized platforms, lending your cryptocurrencies can help generate income. Interest rates vary widely across assets and their demand, but as an option to be considered the returns can be worthwhile.
The descriptions provided about the above trends and products are all based on publicly available information, and as such cannot be considered as financial advice or encouragement to invest through them. All transactions involving digital assets involve certain risks, which you should familiarize yourself with prior to any investment.