An introduction to Crypto baskets
Tags: Investment, Crypto, Blockchain, Invest, Palettes

Sector type

Traditionally, sector funds allows investors to bet on the appreciation of a particular industry category, they see potential in. They help mitigate unsystematic risk via portfolio diversification.

Cryptocurrencies can be segregated into a number of sectors based on their usage or industry like Distributed Storage, Security, Currency, dApps, Crowdfunding, Artificial Intelligence etc. We will take a look on 5 sectors:

Prediction markets — These are markets where participants play against the outcomes of events indicated by the probability of a certain outcome, that is indicated by the market price. Decentralized prediction market are built on a decentralized ledger, making them more flexible, secure, and a number of other advantages. Distributed storage — Distributed storage assets create a market for storage space that is distributed globally across participating computers in a network. The value of a distributed storage will rise when more computers participate in the network and there is more storage space. Dapp network — Decentralized Application (dApp) networks provide protocol which allow many dApps, to run on a decentralized peer-to-peer network. The value of a dApp network is a function of the dApps it can support. Decentralized exchange platform — Decentralized exchange platforms allow the conversion of one crypto-asset to another without any intermediary. The biggest benefits of these platforms are the fact that your crypto is in your hands and not in the hands of a centralized platform. Lending platform — Blockchain lending platforms disburse consumer loans make the process of disbursing these loans more democratic. They generally hold your crypto assets in return for cash based loans and are seeing a lot of demand.

Apart from the above, there are a number of sectors where investments can be made depending on an investors research and exposure. However, sector funds are directly exposed to risks posed at a particular sector, therefore, it is important to evaluate any sectors before making investments.

Markets are like seasons, moving in cycles, they rise and then fall, and then they do it all again. Few sectors are inherently associated with market cycles meaning these companies do well when an economy is growing and undergo correction when the market slows down. But not all of them follow the market trends at the same time. While one might be rising with the market, another might take time or follow a different cycle. Therefore, it is essential to keep a track and rotate these investments.

Sector rotation is an investment strategy that provides investors with a discipline to invest in favorable sectors while avoiding those under pressure with minimum active involvement.

We at Palettes are creating palettes of crypto investments, essentially from crypto baskets which will make it easier for you to passively invest in cryptocurrencies. The best part, you can directly invest in your preferred exchange by integrating Palettes with it thus reducing the hassle of moving your money around too much.

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