Numbers don't lie. crypto marketFrom 1.7 billion in 2013 to 1.02 trillion today, has experienced tremendous growth unimaginable in any other asset class. Over the years, more and more people have been looking for the hottest, newest asset class.

But crypto is a field full of voices — it’s perfectly normal if you don’t know where to start, let’s start by talking about portfolios.

With thousands of new tokens pouring into the crypto space every day, it can be difficult to judge which projects are worth investing in. We can learn one thing from the current bear market and previous experiences: diversify your risk. Just like any other traditional financial portfolio, diversification is very important. You can think of it as a buffet, choose from a variety of dishes according to your preferences.

When you hear the word "crypto," you usually think of bitcoin or ethereum, probably because they make headlines almost every day. But it’s definitely more than that – to diversify your investments, you need to understand the different types of cryptocurrencies on the market.

5 Ways to Diversify Your Crypto Portfolio

• Bitcoin Bitcoin

• Layer 1 and Layer 2 Solutions

• DeFi decentralized finance

• NFT non-homogeneous token

• Metaverse & GameFi

The standard of cryptocurrency "Bitcoin"

Unless you are a caveman, you must have heard of Bitcoin. This is the reason why the concept of the entire decentralized, borderless and peer-to-peer financial encryption ecosystem was born. If you don't know where to start investing in cryptocurrencies, Bitcoin may be a good place to start given its name and popularity.

Bitcoin is the king of cryptocurrencies, ranked in terms of market capitalizationHighest. Since its inception in 2008, Bitcoin has performed remarkably well both as a cryptocurrency and as an investment asset. This shows the level of interest and participation in Bitcoin among retail and institutional investors. It has a deflationary tendency and a first-mover advantage that fits well with the broader macroeconomic environment, so many cryptocurrencies will follow the price trend of Bitcoin.

We all know that the cryptocurrency market is very volatile, but if you are looking for a “relatively” safer and more stable cryptocurrency to diversify your portfolio, then Bitcoin is definitely your first choice.

Want to Buy Bitcoins to Diversify Your Portfolio? Go NowAAX。

Explore Layer 1 and Layer 2 Solutions

EthereumEthereum(ETH)。

Ethereum is a Layer 1 protocol,meanAny decentralized open source blockchain, different applications can be built on the chain. Besides Bitcoin, layer 1 tokens like Ethereum are a good first step for you to explore the world of cryptocurrencies and start diversifying your investments. Other popular blockchains includeBinance Smart Chain(BNB)、Solana(SOL) andAvalanche(AVAX). It is important to note that not all Layer 1 protocols are created equal - you need to have a deep understanding of each protocol, its unique points of difference, application scope, and operational design, such as consensus mechanisms. If you get lost trying to understand the difference between their tokens, keep the following points in mind.

After covering Layer 1 protocols, there is of course "Layer 2". Layer 2 solutions aim to solve some of the difficulties for layer 1 protocols, helping them scale through better security, scalability, or decentralization. Layer 2 protocols are fairly new compared to giants like Bitcoin and Ethereum, but despite their relatively short history, many have grown rapidly. One notable example of this is the Polygon (MATIC), which is the highest-ranked layer 2 token of all time. It is designed to improve upon Ethereum, thereby providing cheaper and faster solutions for developers using the network. Layer 2 extends, adds security and efficiency to existing layer 1 solutions. This type of technology is likely to help blockchains reach eventual mainstream adoption, and their tokens will reflect this potential. To diversify your portfolio with layer 1 and layer 2 tokens, head to AAX today.

DeFi Decentralized Finance

But what do layer 1 and layer 2 protocols stand for without DeFi? not much. DeFi includes everything built on top of layer 1 and layer 2decentralized application(dApp), so it is not only a technology, but also a practical technology.

Thanks to the addition of these promising projects, the speed at which DeFi expands is unbelievable. Each DeFi project usually launches a token with a unique function and name. DeFi tokens are a way to perform financial transactions or participate inDecentralized Autonomous OrganizationA utility token used in (DAO).

If you believe in the cryptocurrency space and what it will bring to our future financial economy, then DeFi is definitely worth learning. It's a great way to give day investors access to assets, lower fees, and higher interest rates. Projects like Compound, Maker, Aave, and Uniswap are excellent examples.

However, diversifying a cryptocurrency portfolio does come with some risks. In particular, DeFi is still an emerging field. But why are DeFi tokens worth investing in? Because they will drive mainstream adoption of encryption and provide real use cases, enhancing the credibility and reliability of the technologies we have discussed so far.

Start your DeFi journey today and head over to AAX to start trading.

NFT non-homogeneous token

NFTis the ultimate buzzword of the past 2 years. Recently, we’ve seen some of the world’s largest companies and institutions join the NFT space — and it makes sense. NFT is an acronym for non-fungible tokens, which represent digital assets of some real-life objects, such as art, music, and even community members. The best part? It's completely code-driven, which means you "actually" own the thing. This has great implications for digital ownership.

If you want to tweak and diversify your cryptocurrency portfolio a bit, research NFTs. However, it is important to note that their nature and pricing are more speculative than cryptocurrencies. But there are already many projects that have made great progress with NFTs, and they are just another way for the encryption field to expand practical use cases. You must have heard of the extraordinary CryptoPunks,Bored Ape Ya c ht ClubSuccessful cases of NFT series collections such as Moonbirds and Moonbirds. NFTs are a great way to diversify your portfolio and gain exposure to the next trends that are developing in the crypto space.

Or, if you want exposure to the NFT space, but don't necessarily want to hold personal collectible assets, you can buy utility tokens that serve as NFT marketplaces to diversify your portfolio. Recently, we wrote an article onLOOKS Tokenarticle, which powers the LooksRare NFT marketplace.

Metaverse & GameFi

andMetaverseandGameFi. These two areas are grouped together because most GameFi tokens are also considered Metaverse tokens.

expected

expectedWith the Metaverse set to grow to $1.8 trillion by 2030, Metaverse tokens are definitely worth considering when you're considering which coins you can leverage to diversify your portfolio. GameFi is the intersection of the gaming industry and DeFi, and is relatively resistant to overall bear market conditions, with "$2.5 billion invested in blockchain games in the first quarter of 2022 alone." Metaverse and GameFi could be a game-changer in the crypto space - not only can it scale on its own, but it can start moving into different areas with a broad economy that will eventually lead to mainstream retail adoption. If you are a firm believer in blockchain technology and want to diversify your portfolio, research this category of cryptocurrencies.

Diversified investment

The above-mentioned assets only include a small part of the entire crypto ecosystem and its different tokens. you can atAAXHundreds of tokens can be found on exchanges, including of course the tokens we discussed above. AAX makes it easy to buy and sell tokens in minutes using a variety of methods including credit cards, cash, P2P transactions, and external exchange deposits.

But before you start investing - remember one important point: don't put all your eggs in one basket. For example, the Terra project'sdeclineClearly demonstrates why you should diversify your portfolio. Diversification is an excellent way to de-risk the overall portfolio and gain exposure to technologies and projects that contribute to decentralization.

About AAX Academy

AAX is a digital asset exchange powered by LSEG Technology. Favored by three million users in over 160 countries around the world, AAX is the first exchange to support Satoshi denominated units (SATS) to drive Bitcoin adoption.

AAX Academy is a user education channel created by AAX, which aims to help more users learn novice tutorials and understand the basics of blockchain.

AAX serves trading users, innovators, NFT artists, high-net-worth investors and users without bank accounts around the world. With the mission of realizing the practical application of digital assets, AAX is committed to making stable currency benefit everyone.