Crypto – A Singular Focus With Multiple Exposures

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26 Sept 2024

Two Keys?
Regarding Crypto, the dedication and focus of a single idea and strategy is crucial. However, so is the practice of diversification. It sounds rather counterintuitive? How can one be focused on a single idea and simultaneously be diversified, as an act of risk management? This idea is often lost in the translation. The correct interpretation and understanding are needed to advance appropriately.
Sometimes you need multiple keys to open a door. This is the case regarding Crypto investments and endeavors. There is a primary investment or strategy. However, multiple investments are required to bolster, protect, and hedge the primary idea. What if your primary investment was FTX’s FTT token in 2022? It was a logical option, as FTT is a Solana-based SPL token and the entity appeared to be on the brink of greatness.
The same is true of Celsius. Investors who allocated their entire savings fell into despair as both entities and their native tokens imploded during the bear market of 2022. Diversification is always an integral aspect of any investment strategy. There is never a case or argument so strong to promote the avoidance of diversification and risk management. I advocate focusing on a single idea. However, it doesn’t stop there.
Multiple Keys
Finding focus and being dedicated to an idea will help fuel and encourage your Crypto journey. There needs to be a strong goal of accumulation and activity to foster persistence and determination. Having a clear objective also helps to measure your progress. As humans, we need to feel as if we are making headway, otherwise, discouragement is bound to set in and eventually stifle our attempts.
This is another important reason why having a main goal is important. This is the ideology I adopt and choose to supplement and enhance my primary objective with multiple, yet smaller goals and objectives. As an investor, you should have a primary investment, accompanied by smaller speculative investments. As mentioned, a 1% allocation that goes on to 100X will double your portfolio value.
Such an investment is usually a micro-cap and can be risky. However, sacrificing 1% of your portfolio to double its value is a well-calculated risk due to the risk/reward ratio being so attractive. This is the best way to proceed. Many will rather focus on a single idea they perceive as safe and prudent. However, anything can happen. Even stability becomes unstable in the face of tragedy.
It’s imperative to remember this as a perfect opportunity can be destroyed by tragedy. Some investors choose to invest in multiple investment opportunities. However, they are all high-risk profiles. This too is not ideal. Find a solid focus with support structures to protect it. This ultimately provides a good level of diversification without compromising the main focus.

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Final Thoughts
This approach incorporates risk management while simultaneously allowing the diversification of ideas and strategies. It’s a win/win scenario and identifying such scenarios is an important aspect of participating in financial markets. Whatever your main focus is don’t forget to add some support. Hopefully, you never need it but if you do, it’s there. All the best, stay safe and I will see you next time!

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Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.