Passive investment with Crypto Baskets
Maximize your returns with a strategic approach
When it comes to investing, a thoughtful and strategic approach is crucial to maximizing returns. Passive investing involves building an investment portfolio by tracking a set of crypto-currencies. Unlike active investing, which involves frequent trading decisions, passive investing takes a more cautious, longer-term approach.
Selecting the best assets
The volatility of the crypto market and the multitude of options available make this first step sometimes difficult for novice investors. By investing in a Crypto Basket, you benefit from a hand-picked selection of the best assets on the market. This saves you an immense amount of research and analysis, namely :
Understanding the project
By exploring the project's documentation, white paper and website in detail, it's already easier to better understand how it works, its vision and objectives. It's also by analyzing the founding team, their backgrounds, and their experience in the industry that you can get a clearer idea of the project's credibility and feasibility.
Market and competitor analysis
A thorough analysis of the crypto market and the competition is necessary to assess a project's relevance and position. Studying market trends, current and projected demand for the project's proposed solution, and existing competition helps determine the project's long-term viability in a rapidly changing competitive landscape.
Evaluating adoption and the community
Community adoption of the project is a key indicator of its potential value. Looking for signs of growing adoption, such as partnerships with established companies, collaborations with other crypto projects, and active community engagement is necessary to understand whether the community is truly engaged. This is a valuable asset for project growth and adoption!
Examining the underlying technology is crucial to determining the long-term potential of a crypto project. The robustness of blockchain used, consensus protocols, scalability, security and functionality offered are all factors in determining whether the technology is strong enough to support growth and large-scale adoption.
Considering the ecological footprint
With growing concerns about the environmental impact of blockchain, it's important to consider whether the project incorporates sustainable practices or not.
By investing in a Crypto Basket, the user benefits from exposure to a multitude of assets through a single line. But diversification is key to successful investing! Whether you're a beginner or an experienced investor, diversifying your portfolio is an essential strategy for minimizing risk and maximizing returns.
One of the main benefits of diversification is risk reduction. By investing in different cryptos, you spread the risk of potential loss. Indeed, if one part of your portfolio suffers a decline, the other parts can compensate for these losses, reducing the overall impact on your portfolio. Diversification also enables you to explore new investment opportunities. By investing in different projects, you can discover assets that might not be available if you focus solely on one area.
Automatic rebalancing and reallocation
One of the major advantages of Crypto Basket is their ability to perform automatic rebalancing. Rebalancing involves adjusting the portfolio's composition to maintain a constant exposure to the underlying securities in accordance with pre-defined management rules. This means that if a crypto outperforms the others, its weighting will be reduced to respect the initial proportions. Similarly, if a crypto underperforms, its weighting will be increased.
Crypto Basket can also perform automatic reallocations to adapt to changing market conditions. By adding new opportunities and deleting those that are no longer relevant, Crypto Basket become self-cleaning products, allowing you to benefit only from the cream of the crypto market. This adaptability enables investors to remain exposed to market opportunities without having to make manual adjustments.
Avoidance of emotional bias
Passive investing is necessarily correlated with long-term investing. By not trying to time the market or predict price movements, you avoid any emotional bias, thus limiting the risk of hasty decision-making based on fear or greed.
The crypto-currency market is well known for its volatility. Price fluctuations can be intense and emotionally taxing. It's crucial not to panic during price dips or give in to euphoria during bullish periods. The emotional bias most notorious for damaging your bottom line is FOMO for "Fear Of Missing Out". The fear of missing an opportunity can lead investors to make snap decisions based on market hype. It's essential to remain objective and not get carried away by popular trends or gains.
When it comes to investing in the crypto-currency market, the passive approach is in 95% of cases the strategy that delivers the most performance over the long term. That's why, at Ambrosia, we've chosen to focus exclusively on this type of investment through our Crypto Basket.
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