For years other cryptocurrencies have directly followed Bitcoin chart movements, but a shift in the space is occurring. As the world of crypto and blockchain grows, projects are beginning to find their own feet and generate enough community backing to separate from the BTC trend.
We saw it last year when Axie Infinity broke away from Bitcoin in May 2021, initiating the crypto gaming run in Q3 and Q4. Ethereum momentarily separated as well during September through to November, continuing to rise as Bitcoin was moving sideways.
As the crypto market rapidly expands and moves in multiple directions, diversifying your portfolio has never been more important. Multiple niches within the crypto space will see rapid growth, while others may not perform so well. A diverse portfolio will also minimize your risk greatly.
There are two main ways to diversify your portfolio in crypto: a) holding a mix of high, mid, and low market cap coins, and b) investing in different sectors and utilities.
While coins with higher market caps ($10 billion+ valuation) are seen as less risky, coins considered as low cap (roughly $300 million valuation or lower) have the potential to multiply your investment significantly more.
Here are a few sectors of crypto to consider investing in, along with some examples in each sector.
DeFi: Avalanche, Terra Luna, Aave
Exchanges: FTX, KuCoin, Bitfinex
Metaverse Coins: The Sandbox, Illuvium, Merit Circle
Layer 1 Ecosystems: Polkadot, Cosmos, Chainlink
Layer 2 Core applications: Moonriver, API3, RMRK
Layer 2 Scaling Solutions: ZK Sync, Polygon, Arbitrum
Storage: Filecoin, BitTorrent, Ocean Protocol
Quick-use Apps: Crypto.com, Swipe, Flow
Games: Vulcan Forged PYR, Gala, WonderHero
Swaps: PancakeSwap, SushiSwap, Uniswap