If you’re considering investing in the cryptocurrency market, then you’re likely worried about maximizing your returns. While the cryptocurrency market offers opportunities to grow a lucrative income, it can also cause you to lose your fortune.

Crypto portfolio management can be extremely complex so make sure you do your research and speak to a financial advisor first.

Let this guide serve as a set of best practices that might work for your particular investing goals.

Here’s what you need to know:

Protect Your Cryptocurrency

Before you start building your crypto portfolio, your first step should be to ensure that it’s protected. The main way to lose your fortune is to leave your cryptocurrency vulnerable to theft.

You can read this article to learn about the pros and cons of using a cryptocurrency ATM. While not perfect, this is currently the best way to buy and hold your crypto investments.

Whether you want to invest in cryptocurrency or invest in Bitcoin solely, this offers the most private and secure experience. You’ll pay for your chosen cryptocurrency using a fiat currency of your choice.

The ATM will print a small receipt known as a paper wallet. On this paper wallet, you’ll have the details of your cryptocurrency wallet. As long as you don’t share this information or lose it, your investments will be safe!

Make sure you also store some of your cryptocurrency on a hardware wallet. Distributing your cryptocurrency across wallets is the best way for maximum protection.

What Makes a Cryptocurrency Worth Investing In?

Before you start accumulating cryptocurrencies you want to understand the criteria that make a particular token worth your investment.

More and more cryptocurrencies get created each month. As a result, it’s safe to say that most cryptocurrencies are useless and many are complete scams.

Let’s start with purchasing power. Many cryptocurrencies, such as Bitcoin, have a finite amount of tokens available. For example, there are only 21 million Bitcoins available in circulation.

Internet users can’t create more than 21 million Bitcoins. As a result, Bitcoin manages to preserve its purchasing power. The same goes for Bitcoin Cash and Ethereum.

But most cryptocurrencies don’t have a finite amount. This doesn’t mean that you should dismiss these cryptocurrencies altogether. However, you might want to be cautious about filling your portfolio with these tokens.

In most cases, you also want to stick to popular cryptocurrencies. Unless it’s for a niche use, if a cryptocurrency isn’t popular then it’s likely not worth your time.

You want to choose a cryptocurrency that’s understood by the general public. Bitcoin, for example, is used by everyday consumers as well as professional investors.

As a final rule, you want to choose a cryptocurrency that’s been around for a few years. You mustn’t get tempted to buy the latest cryptocurrency that seems like it’ll have a promising future.

At a minimum, wait at least three years to analyze the trajectory of a particular cryptocurrency. After this waiting period, you’ll know whether this is worth your investment.

Budget for Cryptocurrency

Before you start buying cryptocurrency you want to prepare your budget for it. You want to keep track of your purchases and sales to know if you’re maximizing your returns.

Due to the volatile nature of cryptocurrency, you want to start slowly with your investments. Start by setting a low budget of how much you want to invest per week.

As a general rule, you might want to invest between $50 to $100 per week in the cryptocurrency market. Watch your cryptocurrency’s progress before you decide to increase your budget.

You must also remember to only invest what you’re willing to lose. While the cryptocurrency market offers many profit opportunities, you can lose your entire fortune in a day!

Take your time to analyze the charts and growth trajectory of the cryptocurrency market first. Then you can decide whether you need to increase your investments or pause altogether.

If your crypto portfolio is falling then you can consider pausing your investments. Don’t feel pressured to continuously dump your fiat cash into the cryptocurrency market.

If the market is falling you can consider selling it to minimize your losses. Or, you can consider holding onto your tokens to see if an upward swing is en route.

Bitcoin Maximalism

One of the most popular investment strategies for seasoned investors is to opt for Bitcoin Maximalism. With this method, you’ll focus on only buying Bitcoin. 

Many professional investors and influencers advocate that Bitcoin is the only cryptocurrency worth investing in. 

Bitcoin is the most popular cryptocurrency available. It fell to around $20K per coin at the end of the first quarter of 2022. It’s also gone as high as $60K per coin.

As a result, it still offers the best option to build wealth. So far, no other cryptocurrency has reached a fiat value as high as Bitcoin. If you want to focus on maximizing your returns as fast as possible, there’s a strong case for focusing on Bitcoin.

Once again, make sure you do your research if you choose this route. Bitcoin Maximalism has won both welcoming praise and harsh criticism so you want to follow what you think is best.

The Case Against Maximalism

Some investors make the case for diversifying your options within your crypto portfolio. This helps you grow your returns in case one or two cryptocurrencies fall.

For example, let’s say the price of Bitcoin continues to plummet as it has since the beginning of 2022. You want to hold other cryptocurrencies that have a steady growth trajectory.

The price of Bitcoin Cash, for instance, hasn’t reached the heights of Bitcoin. But, this cryptocurrency hasn’t had extreme plummets like its predecessor. The same goes for Ethereum, which is currently the second most popular cryptocurrency.

You want to consider whether maximalism or diversification works best for your needs.

If you opt for the latter, it’s still better to focus on one or two cryptocurrencies. If you invest in too many, then you’ll spread yourself thin and won’t make any significant gains.

Consider Stablecoins

One popular type of cryptocurrency is the stablecoin. This is a cryptocurrency that’s tied to the value of a fiat currency. 

For example, USDC is tied with the US Dollar. If you ever need to access US Dollars, you can just buy several USDC tokens rather than holding excess cash.

If a particular fiat currency grows in value, then you can always exchange the stablecoin for cash.

Consider DeFi

A new type of altcoin that still hasn’t made waves in the cryptocurrency market. But that doesn’t mean it doesn’t hold much value at all!

DeFi stands for ‘Decentralized Finance’ and is an alternative to traditional financial systems. Many investors see DeFi as the future currency for DAOs.

DAOs stand for ‘Decentralized Autonomous Organizations.’ Some futurists assert that we’ll soon establish companies and even virtual nations on the blockchain.

DeFi cryptocurrencies will become the preferred currencies for operating within these DAOs. As a result, now might be the best time to accumulate as much DeFi as possible.

You’ll want to look into the purpose of a DeFi cryptocurrency before investing in it. Make sure you understand why the DeFi cryptocurrency was created before you choose to invest in it.

Buy Assets With Cryptocurrency

Many cryptocurrency investors make the mistake of depending on their coins to bring in returns on their own. But you can use cryptocurrency to buy assets that’ll bring you higher returns.

For example, Ethereum is the most popular cryptocurrency for buying NFTs. These NFTs serve as proof of ownership for a digital asset — most popularly, digital art.

You can then re-sell or share this digital asset to earn further profits. Many NFT collectors will open virtual museums to share their art collections with internet users. They’ll earn profits from selling virtual tickets to this museum.

Likewise, with your Bitcoin, you can buy other valuable assets. For example, you can amass a collection of different fiat currencies.

You can buy fiat currencies that are growing in value. This can help protect you against inflation. It also gives you the option to amass cash, which is always crucial in a recession.

Many cryptocurrencies such as Bitcoin and Bitcoin Cash have become accepted currencies for buying precious metals. Precious metals such as gold and silver are great stores of value. They work to hedge against inflation and can also serve as great investment assets.

One of the best ways to maximize your returns is to use your cryptocurrency to buy appreciating assets.

Build Your Cryptocurrency Portfolio

Now you know how to build a great cryptocurrency portfolio that’ll help you maximize your returns.

You want to start by learning how to protect your cryptocurrency. The best option remains to use a cryptocurrency ATM to buy and hold your investments.

You can then look into whether you want to opt for Bitcoin Maximalism or diversify your portfolio. Make sure you also consider using your cryptocurrency to buy other valuable assets.

You can find more tips on how to invest in cryptocurrency on our blog.