The Benefits of Diversification in Unstable Market Conditions

Both stocks and crypto markets have experienced a sudden sharp decline in August following a broad rally that lost momentum in July. This downturn seems to stem from weaker-than-expected economic fundamentals—particularly the July US jobs report—and negative technical factors.

Given that market valuations were trading above our composite fair value estimate, this selloff is not entirely unexpected. While such declines can be significant, they are not uncommon and should not incite panic.

However, if a sudden drop of 20% or more feels challenging to endure, it might be time to consider diversification.

Why it matters:

Diversification is a smart investment strategy that involves spreading your investments across different asset types to balance risk and reward. A well-diversified portfolio aims to increase returns while reducing unnecessary risks, thereby improving your overall performance.

The Big Picture:

Numerous investors assume their portfolios are well-diversified, but this is often not the case. Diversification is akin to not putting all your eggs in one basket. With market fluctuations like those witnessed in the past 48 hours, products like the TradeTogether Bitcoin Advantage Fund can significantly limit downside risk (no more than a 5% drop in your portfolio with a low-risk strategy).

Furthermore, effective diversification combining downside risk protection on assets like Bitcoin, along with digital bonds yielding 14% before fees, allows you to smooth out risk over the year. This strategy enables you to benefit from Bitcoin’s potential upside (up to 75% per annum).

Diversify your Portfolio to grow your Wealth in Web3, safely.

By diversifying across the dimensions recommended in this article, you can enhance your risk-adjusted returns over the long term. Building a properly diversified Web3 portfolio doesn’t have to be labor-intensive. A well-diversified portfolio also allows you to take advantage of rebalancing with various Web3 funds and cryptocurrency downside protection. TradeTogether offers both services to clients at no additional cost.

What users are saying?

Our survey and risk profiling information since 2021 reveal that users often tend to keep their assets in funds that are heavily reliant on stocks and low-yield government bonds. This new type of alternative asset can help invigorate your existing portfolio while providing the benefits of a new asset class.

Between the Lines:

At TradeTogether, we champion the idea of Web3 wealth management. Listening to our users has led us to believe that breaking down these silos, including access to ETFs, is crucial. Since the registration of our Fund Vehicle schemes for Accredited Investors in 2021 and our applications for multiple licenses across the globe, we have been proactive in consolidating these services by segregating each one and selecting the right partners. Our upcoming tech releases will be the culmination of these efforts, providing an all-in-one user platform that is essential for unleashing Web3’s full potential.
Register on our website and contact advisor@tradetogether.com to learn more about how we can help you navigate the future of wealth management.