Benzinga | Jul 6, 2021 07:57AM EDT

Crypto as a Long Term Asset, Why You Might Want to HODL

Image by Bermix Studio on Unsplash

With the pandemic creating public and business uncertainty around the globe into its second year, it stands to reason that unsteady sentiment shows itself as volatility in the marketplace. Keeping a close eye on your investments or potential investments is crucial to the success of your portfolio. That holds true for any asset, including cryptocurrencies, which have increased in popularity as quarantined individuals dip their toes in the market.

But how do you choose investments and decide how long to hold them when the marketplace is unpredictable? One of the keys to managing your holdings lies in your ability to diversify effectively.

The Importance of Diversification

When you invest in an asset, you are inherently saying you think that asset will increase in value over time. Otherwise, you wouldn't buy it. But buying low, holding and selling high isn't as easy as it might sound. Outside influences locally and worldwide play a large part in determining the price of an investment. Since you can't predict what will happen tomorrow or the next day, it's wise to spread your holdings across different sectors. That way, when one industry goes up, say cryptocurrencies like Ethereum (ETH), and another sector like healthcare dips down, you take a minimum hit to your overall portfolio.

Volatility Can Be a Good Thing

With cryptocurrency volatility so much in the news today, you might think about steering clear of the digital currency space altogether. But significant movements in the market aren't necessarily a bad thing. Remember, the only time you experience a loss or gain is when you sell an asset. So, buying cryptocurrency through a company like Hodlnaut and HODLing it to round out and diversify your portfolio could add the risk element you need to reach your ultimate investment goals. Not to mention, you can earn interest on your crypto holdings with Hodlnaut without trading a thing.

How Crypto Can Fit Your Portfolio Long Term

Although crypto is a relatively new asset class and is popular for day traders taking advantage of the ever-changing market to generate short-term gains, that doesn't mean Bitcoin (BTC) and the like are only beneficial for the short term. If you want to HODL crypto as a long-term asset, it's no different than adding stock to your portfolio. Take a look at your investment goals and ask yourself if your current holdings will yield the result you crave over time. If the answer is no, it might be time to look into adding a digital currency to your plan. That said, thoroughly investigate every investment asset before committing or get some answers from a financial professional with experience in crypto for advice.

Research, Invest, Adjust

Your investment portfolio is a living group of assets that change over time due to circumstances beyond the investor's control. You will never know the exact perfect time to enter or exit the market, so it's best to decide on your goals, do research, invest and keep a close eye on your investments. Make sure your portfolio stays on the pathway to your monetary goals and adjust your holdings as necessary to stay on track. Whether you add and hold Bitcoin, Apple (NASDAQ:AAPL) or Etsy (NASDAQ:ETSY) or any other tradable asset, the key to success is staying alert, getting ready to ride the waves and keeping your focus on your long-term prize.