It is often recommended to diversify one's investment to minimize risk and maximize long-term returns. Nevertheless, this often requires a management effort. So what are the solutions?

Diversification: a basic rule of investing

Crypto-currencies have taken the investment world by storm in recent years, attracting millions of investors around the world. As more and more people become interested in the potential earning opportunities that digital assets offer, it's important to remember that any investment carries risk. The golden rule when investing is to diversify your portfolio.

Reduce the risks

One of the most obvious reasons to diversify your portfolio is to reduce risk. In the crypto world, where price fluctuations are frequent and often unpredictable, it's important not to put all your eggs in one basket. Indeed, if a specific asset suffers a drop in value, the other crypto-currencies in the portfolio can make up for the losses.

Maximize potential gains

In addition to reducing risk, diversification can also help maximize potential gains. By broadening your investment focus across different sectors and industries, you have the opportunity to benefit from the appreciation of multiple assets.

The limits of diversification

While diversification is an essential concept in building a crypto portfolio, it can, on the other hand, have some limitations. The more assets in a portfolio, the more investments there will be to track. This can make it difficult to track the individual performance of each investment.

A large diversification will require more time and effort to ensure rebalancing and reallocation of the portfolio. The hours spent tracking the projects you are exposed to and the necessary adjustments are not to be overlooked when committing to an investment!

Automate rebalancing and reallocation

In recent years, the popularity of ETFs (Exchange Trading Funds) in the equity market has increased. More and more investors looking for passivity and peace of mind are exposing themselves to this type of product. Why are they so popular?

ETFs allow investors to buy diversified exposure to a given market or sector without having to buy each security individually. ETFs are designed to track a specific benchmark, such as the S&P 500, and their value fluctuates with changes in the prices of the underlying securities.

The advantage of ETFs is that they are highly diversified without requiring any management effort. In fact, the index company is responsible for rebalancing and reallocating all the assets on a monthly or quarterly basis. The investor has nothing to do. Everything is done in a 100% automatic way!

Now that you have understood the interest of ETFs on the stock market, why not replicate products with equivalent features but for crypto? Good news, that's what Ambrosia does!

Ambrosia's Crypto Baskets

Ambrosia allows all new investors to gain exposure to a diversified basket of crypto assets corresponding to a specific theme. A 100% passive investment because, like an ETF, Ambrosia's experts rebalance and reallocate each theme at the end of each month. The investor does not have to worry about managing his portfolio: all re-balancing is done automatically!

As an example, an investor places €100 on the Royal Crypto Basket composed of 50% bitcoin (BTC) and 50% ether (ETH). One month later, the price of Bitcoin has risen and the value of the portfolio exceeds 50% bitcoin. Ambrosia will then rebalance by selling some of the bitcoin to buy ether. The Royal Crypto Basket is then balanced again with a 50/50 allocation.

Thus, Ambrosia's Crypto Baskets are a simple and effective way to minimize risk, maintain diversification and maximize long-term returns.