How do newbies configure cryptographic assets? Just read this one

As we all know, risks and returns are directly proportional, and investments with high returns will naturally have greater risks. In the world of crypto assets, the risk of investing in mainstream currencies is much lower than that of altcoins. Therefore, it is not difficult to understand that the investment return of some altcoins will be higher than that of mainstream currencies. Investment in currencies in different sectors has its own advantages and disadvantages, so what crypto assets are suitable for novices to buy? How to manage positions and adjust mentality?

1. Understanding and selection of types of cryptographic assets

After more than ten years of development, Bitcoin has gradually been accepted and recognized by investors. More and more users outside the circle have begun to understand Bitcoin and choose to enter the crypto world. After entering this world, we found that Not only is Bitcoin an investment target, investors also have hundreds of asset allocation options.

1. Mainstream coins

Crypto assets that rank among the top in the crypto market value rankings are often called mainstream coins. Mainstream coins are characterized by a large user base, good transaction depth, and high market activity., and most of them have experienced historical tests and have strong ability to resist risks. Mainstream currencies generally have a strong consensus in the crypto market, have great practical application value, and have better liquidity than ordinary crypto assets. They are generally recognized as investment targets by investors.

Therefore, for novice users who have just entered the market, it is relatively more appropriate to allocate mainstream assets, such as Bitcoin, Ethereum, Litecoin, Ripple, etc. As the first crypto asset, Bitcoin accounts for half of the market value of the entire crypto asset. Many old users will use its trend as the main reference for allocating other assets. For the introduction of Bitcoin and its investment value, please refer to \"What is Bitcoin\" and \"Why is Bitcoin Worth Investing\". For the introduction of other mainstream currencies, please see \"What is a Mainstream Currency?\" What is a stablecoin? What is Altcoins?

These mainstream currencies have high market familiarity, strong liquidity, and relatively low investment risks. They can be said to be wise choices for new users to invest in crypto assets.

2. Altcoins

Altcoins are compared to mainstream currencies. The word \"copycat\" in altcoins is not a derogatory term. It is also a cryptographic asset generated by using blockchain technology. It is just that its market understanding, consensus and liquidity are not as high as mainstream currencies. However, if there is an explosion of popularity, it will also perform well, such as the hot Meme coins, the explosion of public chain tokens, as well as GameFi, Layer 2, DeFi, NFT concept coins, etc., are all leaders of the investment boom in different periods of time.

So, does altcoins have investment value? This issue is somewhat different. Judging from the historical price trend of altcoins, its price fluctuations fluctuate greatly, so it still needs to be left to time and the market to test.

For new users, before investing in a certain altcoin, they must first understand what its nature is. Are there application scenarios? What is the purpose of investing in altcoins? Invest prudently within confirming your own capabilities and risk tolerance.

3. stablecoins, platform coins

There are also concepts like stablecoins and platform coins among crypto assets.

stablecoins, as the name suggests, are digital assets that are not affected by price fluctuations. Their biggest characteristic is that their prices are stable and will not rise and fall like Bitcoin. If \"stablecoins\" want to keep prices stable, they need to have some alternative value support, such as US dollars, gold or other basket of legal currencies. Therefore, there are many dollar stablecoins (such as USDT, GUSD, etc.) and previous Facebook\'s Diem(Libra) stablecoins project.

The emergence of U.S. dollar stablecoins is mainly to solve two problems: 1) The problem of excessive fluctuations in digital currency prices. 2)Serve as a medium of exchange for fiat and cryptocurrencies. Currently, the oldest stablecoin is USDT. It is issued by Tether, a company formed by Bitfinex, the world\'s largest digital currency trading platform. It is anchored in the US dollar. The price of 1USDT is approximately equal to 1 US dollar. Users reserve U.S. dollars in Tether\'s bank account, and Tether issues U.S. dollar certificates with a price equal to one dollar. Simply understood, the number of USDTs issued means the number of dollars Tether Company has in reserves. In addition to USDT, there are also stablecoins such as USDC, TUSD, GUSD, DAI, and PAX.

Platform coins refer to the tokens/universal points of digital asset trading platforms. Because most of its application scenarios are within the platform, they are also called platform coins by investors. But it is precisely because it relies on the trading platform that it inherently has its own transaction value and circulation value. For example, Ou Yi\'s OKB.

2. Allocation of different crypto assets in different positions

For novice users who are new to the currency circle, it is recommended to invest some of their idle funds. New users try not to put eggs in one basket when allocating assets, and learn to allocate different cryptographic assets in different positions to reduce investment risks. If you have 1000 yuan of idle funds, then you can invest most of your funds in mainstream currencies, such as Bitcoin, Ethereum, etc. If you recognize the value of mainstream currencies, you can consider lengthening the investment cycle. The remaining small amount of funds can be used to allocate altcoins. However, since the volatility of altcoins is usually large, you need to pay attention to risk control. When you do not have full confidence and experience, it is recommended not to hold them for a long time. After all, it contains high risks. Not acceptable to all investors.

There is actually another sentence in \"Don\'t put eggs in one basket\", which is-\"But don\'t put them in too many baskets.\" Asset allocation actually uses the risk differences between different assets to reduce overall risk and reduce the volatility of the investment portfolio. Real diversification focuses on the differentiation of investment platforms and wealth management products, and diversification of investment in terms of platform types, product types, investment periods, expected returns, etc.

After understanding the configuration of cryptographic assets, new users should also pay attention to the entry time. Choosing a better entry time can often earn more benefits. If you are a new user who has done enough homework to understand and recognize the concept and value of crypto assets, then in fact, every market crash is a good time to enter. Extend the investment cycle appropriately and don\'t care about short-term fluctuations in exchange for greater returns; If you are a novice user who still knows little about crypto assets and have only heard of popular currencies such as Bitcoin and Dogcoin, then you need to understand the overall market trend and the historical price trend of the crypto assets you want to invest in, and at the same time Get the latest news in a timely manner to assist you in your judgment, buy low and sell high, and earn profits based on market fluctuations. Of course, the market for cryptographic assets is highly volatile, and attention needs to be paid to risk control.

3. Position management and mentality management

Whenever there is a large market fluctuation in the crypto market, position management and mentality management become extremely important.

Many investors regard making money as the primary purpose of investment. In fact, this is not the case. Buffett, the stock god, once shared his investment philosophy, which is to keep the principal, and the same is true for investing in crypto assets. When the market fluctuates greatly, our primary goal is to protect the capital, and then make profits. Every qualified investor needs to build a position management system of his own. No matter what time, he must remember to strictly stop losses. Many people know the method of compound interest and adding positions. This method is equivalent to abandoning position management. So at this time, we must achieve absolute and strict stop losses. If you abandon them, you will inevitably end up losing your money.

In addition, mentality management is a point that many investors often overlook. Some investors who know something about the K-line can be said to be well-informed when analyzing trends or technical aspects, such as left-hand trading, right-hand trading, Fibonacci retracement, etc. However, if mentality management cannot be done well, then investors are very likely to cause great frustration and self-doubt due to one or two misjudgments, and may even affect investment and financial management for a long time. After all, people are not gods and cannot be accurate in every judgment. If investors can properly manage their mentality, even if they make several mistakes in judgment, they can quickly clean up their mood and get ready again. Mentality management can make investors more confident in trading.

Good mental management includes thinking about risks, accepting risks, resisting FOMO emotions, eliminating illusions, managing income expectations, etc. As the ancients said,\"A general does not think about victory before thinking about defeat, so he can win in a hundred battles.\" On the contrary, not accepting risks means avoiding risks, and the consequences may be disastrous. For example, investors who like to avoid risks are often prone to FOMO emotions when the market conditions are improving, that is, they see a certain crypto asset rising one after another and have a chasing mentality. This kind of blind buying without analyzing the market behavior is likely to make investors feel remorse when the crypto asset falls.

Conclusion

As a novice user who is about to enter the market or has already entered the market, you must not only comprehensively examine mainstream currencies like Bitcoin, but also have an in-depth understanding of other blockchain projects. The use and value of projects. When you recognize the value of the blockchain projects you are studying, such as the popular DeFi, NFT, Boca and other sectors, then your investment confidence will be more sufficient, and your awareness of risks and the point of taking profits and stopping losses will be clearer. Of course, like investing in other varieties, investment in crypto assets does not only make profits but also carries risks. Therefore, investors need to pay attention to position management and mentality management to reasonably control risks.