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Why  –  and how  – crypto should be in your balanced portfolio

Rodrigo Marques, CEO of Atlas Quantum

We have a simple mission at Atlas Quantum: to help the world build wealth through cryptocurrencies. We believe that the strategies usually reserved for wealthy individuals and large institutional investors should be available to everyone. That’s why we built a platform that combines the power of smart algorithms, sophisticated trading strategies and the decentralized nature of new digital currencies like Bitcoin.

Of course, it can be daunting for any new investor to get started — especially when it comes to a new asset class like cryptocurrencies. We’ve spent a lot of time early on, educating people on the market and the technology behind it. But one question we’re often asked by those new to crypto is: what role should these assets be playing in a balanced portfolio?

It’s an important question — so to answer it best, let’s break it down to the key component parts.

Why crypto?

There are plenty of reasons to choose crypto, from the transparent and democratic nature of crypto, to the important role crypto could play in truly democratizing the financial markets globally. And of course, chances are at least one of your friends has talked about investing in the space.

But perhaps most importantly, it’s now rapidly gaining mainstream acceptance as an asset class. We spoke to Bitcoinist just last month about how significant regulatory ‘u-turns’ in a number of regions suggests that mainstream acceptance for crypto is not far away. And of course, cryptocurrencies are no standard asset class — so they’ll bring new opportunities for all sorts of investor types.

Finding balance and playing the long game

That word ‘balance’ is key. For even the most conservative, passive investor, there’s a lot to be said for the role of cryptocurrencies in your portfolio. While opinions still vary, sentiment does increasingly suggest that the crypto asset class is a positive ‘bull market’ in the long term, with valuations likely to increase as regulatory clarity improves and institutional investors get involved.

Whether you’re new to investing or not, the importance of diversification is unsurprising and easy to grasp. It’s a simple but effective way to lower the risks of investing, ensuring your profits — or losses — are never tied to one single type of asset or strategy. A diversified portfolio is a stable portfolio. And of course, for those specializing in cryptocurrencies, diversification can be applied within an asset class, too. As CoinCentral outlined recently, crypto specialist investors could consider investing across crypto assets with large, medium and smaller market caps, in order to build a diversified crypto portfolio.

What does that mean for you? Whatever type of portfolio you’re building, there’s a role for crypto to play. Even if you intend to take the long-term ‘buy and hold’ approach with a traditional investment portfolio, a modest holding of cryptocurrencies might be worth considering.

Volatility and opportunity

Clearly there’s a role for cryptocurrencies to play in a passive investing strategy. But when you combine the conditions of the crypto market, with the sophistication of other classic trading strategies, things get really interesting.

That’s where a platform like Atlas Quantum comes in. Because while Bitcoin is bought and sold at various digital brokerages around the world, a range of differing market conditions mean that the price is often cheaper or more expensive in one market, compared with another. When you deploy a smart algorithm to continuously monitor for fluctuations between those exchanges, ready to take advantage of that ‘arbitrage’, you get a perfect storm of old and new financial investing. It’s an approach that’s already working well for our users, with the platform yielding an average monthly profit of 2–3%, in the first two years of operation (and 5.24% back in April).

So when it comes to investing in cryptocurrencies, don’t forget all the tried and tested techniques that can help you get started — and look out for smart ways to take advantage of volatility.