Learn How To Reduce Your Risk
Altcoins that go on to produce incredible returns are often unknown and inconspicuous when they are identified by “altcoin hunters”. This simultaneously implies tremendous risk. Altcoin investors often look to the Top 100 (by market cap) when scouting out a new investment opportunity. This is generally thought to be a safer and smarter approach. A project that goes on to impress the market still has a lot of upside, even within the Top 100. However, it’s not as safe as many would believe, even Cardano dropped approximately 98% in the previous bear market. That’s pretty bleak for a top-tier altcoin.
Ideally, investors need to gain exposure to high risk/reward projects without incurring the risk, right? This sounds impossible, and yet, is actually quite attainable. If you could print your own money, in order to invest in altcoins, you would be risk-free. This is exactly the scenario that passive income produces. Before I continue, so many believe that passive income requires capital allocation. This is untrue. There are many passive income opportunities that require some type of capital investment. However, there are other ways to generate passive income without initial capital.
This is where Crypto enthusiasts need to get creative. Once you have passive income streams in place and producing, you are able to reduce your risk rather significantly. Altcoin investments that are funded by passive income are in essence funded with “free money”. This is money that you did not have to work for. Furthermore, it is neither funded from your savings or any other means. In short, your regular income (salary) and savings remain untouched. What does this mean? Quite simply, you have removed the risk factor. If neither your salary nor savings are at risk, then in essence, your investment poses zero threat, even if it goes to zero.
Aggressive Continuation
This is where commitment to a predefined strategy comes into play. I am continuously working at growing these passive income streams because I know that as they increase, I am able to allocate more to my particular altcoin picks. Even if an altcoin funded via these mechanisms fails completely, they will once again have fresh income for me to allocate tomorrow, and for as long as they continue to produce. The idea is to feed and initiate new investments via these mechanisms. This can create somewhat of a compounding effect, depending on how far you are willing to take it.
Semi-passive ideas such as Hive are also great for this type of strategy. Remember, Hive once powered up, is able to generate a basically passive form of income. Curation rewards become rather meaningful once a significant stake is achieved. This is why so many Hivers continue to hustle, in order to build their accounts and eventually generate a significant form of relatively passive income. The attention to passive and residual income is very important, for two main reasons.
- It ensures ongoing income, regardless of market conditions
- Reduces risk and creates new investment opportunities
This is simply the best way to generate capital for altcoin allocation, in my opinion. Seeing an altcoin holding down 90% can be soul-destroying. However, if it never costs you anything, it’s a lot easier to accept and digest. This idea can actually be considered a form of risk management. In essence, you are able to increase your holdings and allocation without increasing risk.
Final Thoughts
Many consider passive income to be the absolute apex when it comes to income generation. I am definitely of this mindset and am always looking to enhance and increase this aspect of my portfolio. There is a tremendous amount of solace, in knowing that if you are unable to work, there is a guaranteed form of income. That is also the beauty of this idea, in difficult times, these passive income streams can also be utilized as living expenses.
Once things stabilize, altcoin accumulation can resume. This is a great additional benefit and one that everybody should be considering when you look at the current state of economic and global uncertainty. Anyway, that’s it for this one. See you next time!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
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