Crypto Portfolio ▷ Improve your trading with our help!
When it comes to stocks and financial markets, it is often said that having a balanced investment portfolio is an essential part of long-term success. So why should it be any different with cryptocurrencies? We are not financial advisors but we can describe our mindset to you, which has helped us create our own cryptocurrency portfolio.
The first thing to keep in mind is that cryptocurrencies are particularly volatile. Every cryptocurrency investor needs to be prepared for their crypto holdings to drop to zero. In such a case, it is important that the investors' quality of life does not change. So only ever invest as much money as you are willing to lose.
You will find great potential in new cryptocurrency projects. However, statistics show that 90% of all starts fail. But there is often exponential growth in the remaining 10%. Example: If you invest in 10 random cryptocurrency projects, on average, you can expect 9 of them to eventually lose value.
Cryptocurrency price fluctuations can be massive. There were days when our investments went up or down 50%. Because of this, it's important to only invest what you can afford to lose. When you are overly invested in cryptos, you are more emotionally vulnerable to buying at the highs and selling at the lows.
The cryptocurrency market is currently immature and relatively small. In 2018, however, cryptocurrencies received global attention for the first time. We believe that as more large financial players enter the market, there is potential for extraordinary growth.
The problem with short-term investments is that you are forced to sell after a period of time (regardless of where the market is). If you invested $ 10.000 and had a time horizon of 1 month, it may be that this month has been very volatile and that you will simply exit at the wrong time.
A long time horizon gives us the opportunity to grow and multiply profits over time. Make it your business to act without emotion. This is how they benefit from long-term (and bigger) profits. Nobody wants to be the person who sold Nike stock in 1998 because of short-term thinking. Because that's the only way to miss high profits for two decades. If you are convinced of the long-term growth potential of a cryptocurrency project, why sell it in a few months?
We believe that Total net worth is an extremely important factor in any investment. The reason for this is to reduce the risk by diversifying across different asset classes such as real estate, bonds, stocks & shares, gold, cryptocurrencies, etc. This means that if the asset class cryptocurrencies falls, your financial assets should not go into the red. Never put all your eggs in one basket.
Total net worth: Also called net worth, financial assets, or net worth. The total net worth is the sum of all assets. This means that all of your assets and investments together make up your net worth. Your private assets such as your house, car, etc. are also counted as assets.
If you invest a high percentage of your total net worth in cryptocurrencies, then you are particularly exposed to the ups and downs of the cryptocurrency market. Not only is this potentially stressful, but it could also be seriously damaging to your entire net worth and affect your personal life. It's about minimizing risks and simultaneously to maximize profit potential.
Our rule of thumb is that we would never invest more than around 20% of our net worth in the crypto market. No matter how high our belief in a cryptocurrency is, we would never finance a purchase with debt. Because especially if you get into the negative balance this can lead to very stressful and financially damaging situations.
As beautiful as the growth and potential of the crypto market may be, we still have to be aware that there are other attractive opportunities to invest in addition to crypto currencies.
The different types of cryptocurrency projects
There are many different types of cryptocurrency projects and already over 1000 different cryptocurrencies. Every single coin has its own vision.
But watch out! Many cryptocurrencies do not have a real vision, but merely serve to manipulate the crowd. That is why it is particularly important to take a close look at the company before investing in a crypto project.
Application developer platforms
Developer platforms are crypto projects that develop their own blockchains and application developer tools. In this way, third-party application developers can build on the platform and even their own ICO's start.
Examples: Ethereum, Cardano, EOS, etc.
There is a theory that the top rated cryptocurrencies are developer platforms, and that's why we like to have such projects in our portfolio.
The cryptocurrency market and blockchain are inventions from the 21st century. This means that there is a lack of standardization when it comes to blockchain solutions. There are many problems that blockchain technology can solve, but we think the solution has to be easy to use.
Always keep in mind that while there are some meaningful cryptocurrency projects, there are unfortunately at least as many meaningless projects out there.
Ecosystems / Eco-Systems
Anyone who has been drawn into the Apple ecosystem probably knows how user-friendly and simple such a system can be. Well, there are also cryptocurrency projects that create ecosystems. At Bitcoin-News.one, we believe that meaningful ecosystems in the blockchain space can perform exceptionally well in the long term. This is because they create efficiencies and it will be quite difficult for companies to deviate from them.
There is already a noted crypto project that enables developers to create corporate solutions in the network. The network already has special blockchains for banks, hospitals, universities, insurance companies and securities. This means that an application based on the blockchain can be used by any bank on the network. The ecosystem also enables information and data to be exchanged between different sectors in the network. In this way, insurance companies can easily and securely exchange data with banks in the network.
The more companies use an ecosystem, the more efficient and valuable it becomes. We think this makes cryptocurrency ecosystems potentially very profitable.
Speed & Scalability
In December 2017, the Bitcoin network nearly came to a standstill as it couldn't process enough transactions per second to work up the backlog and process payments in a timely manner. Ethereum also had a similar problem as too many users stalled the Ethereum network.
In order to make cryptocurrencies and application developer platforms universally usable, they must be able to cope with an increasing number of users. This is where speed and scalability solutions come into play, and there are cryptocurrency projects that specialize exclusively in these areas.
For example, the application development platform NEO can process 10.000 transactions per second. But with a certain scaling solution, it can handle up to 100 million off-chain transactions per second.
As blockchain technology becomes more common, we see an ever increasing need for scaling solutions. This Wikipedia article explains the typical scaling problem of cryptocurrencies.
Disruptors / innovators
Disruptors or innovators are projects that break new ground and create completely new markets. They are your classic high risk, high return investment. Many will fail, but those who succeed could completely change the industry in which they operate.
Mark Zuckerberg completely changed the way we communicate with friends. There are cryptocurrency projects trying to do the same in the same but also in other industries.
Disruptors have great potential. That's why we at Bitcoin News have included such innovators in our portfolio. Here it is particularly important to conduct your own research and analyze the company and its team.
Government financial regulation is a threat to many in the world. It is very easy for a government to ban cryptocurrency transactions. One reason for this could be that they will not be able to control the decentralized exchange.
This also means that cryptocurrency investors should be able to freely trade on a decentralized cryptocurrency exchange.
As cryptocurrencies increase in value, centralized exchanges are also becoming a growing target for hackers. Every investor with cryptocurrency on a centralized exchange is forced to trust that the exchange is behaving properly and has the necessary security measures in place. Decentralized exchanges eliminate these problems and therefore we believe that they will eventually replace older centralized exchanges.
Well-known decentralized exchanges are 0x and Changelly, for example. Binance is currently also in the process of decentralizing your exchange.
Data protection projects can work well and offer great potential. The reason for this is that some data protection coins serve as protection against government over-regulation.
We understand the argument why data protection is so important and believe that everyone should have a right to privacy.
Examples of privacy coins are Monero and Verge.
Big market cap vs. small market cap
In general, larger capitalization cryptocurrencies are less risky, but have less chance of phenomenal returns. On the flip side, lower market cap coins generally have much higher risk, but sometimes have the potential for bigger gains. With cryptocurrencies, however, you must always be aware that even large market cap coins can still lose 70% or even 100% of their value.
When creating a portfolio, it is always important to know how much risk you are willing to take and, based on this, you should organize your cryptocurrency holdings. The less risk you take, the greater the proportion of large market cap coins should be.
Of course there is the option to carry out chart analyzes: you draw lines and triangles and thus determine the perfect market entry. This option may be profitable for some investors, but we want to factor in the cost average. This means that we split the amount of money we are willing to invest into pieces and invest a fixed amount each week or month.
This also means that we buy more cryptos when the market goes down and buy wisely when the market goes up. The disadvantage of investing all the money in one go is that you are forced to essentially gauge the market. Because of this, we take the emotion out of investing and use the cost average to determine our entry points.
Different types of portfolios according to risk tolerance
As we are not financial advisors, the information you find here is merely our own experience and not investment advice.
Conservative crypto portfolio
The aim of this cryptocurrency portfolio is to outperform the overall market in times of market downturns while at the same time taking advantage of the market's significant plus. Bitcoins News can say from experience that such a portfolio will achieve significantly better performance than assets such as stocks and shares in a negative market.
Reasons for a conservative portfolio
- Bitcoin essentially determines the cryptocurrency market as the most popular trading pairs include the bitcoin. Most altcoins don't actually have a direct EUR value, but rather a value in Bitcoin that can then be converted into EUR to determine the EUR value of the altcoin. Usually when bitcoin does badly, altcoins also decline. In a negative market, Bitcoin generally rises more slowly than Altcoins. This leads to the assumption that while Bitcoin is volatile, it is less volatile than other cryptocurrencies.
- Ethereum is the largest application development platform on the market and has firmly established itself as the second largest cryptocurrency. Ethereum's first mover advantage in the application development platform area gives Ethereum a massive advantage over its competitors.
- Litecoin has long been the testing ground for Bitcoin upgrades. More and more people are becoming aware of Litecoin and psychologically people seem to think that they are getting better value by buying a whole coin that costs around € 100 instead of a coin that costs thousands.
Are you interested in adding Bitcoin, Ethereum or Litecoin to your portfolio?
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- Tradable cryptocurrencies: Bitcoin, Ethereum, Ethereum Classic, Bitcoin Cash and Litecoin
Medium risk portfolio
There are some altcoins that are associated with medium risk. Such cryptocurrencies have good staying power and are often undervalued. Examples of undervalued cryptocurrencies are NEO and Ethereum. But whether they will stay on the market in the long term is not clear.
Such a portfolio enables you to participate in more exotic cryptocurrency projects with a higher risk / reward profile. We at Bitcoin News have thus found a good balance between the big cryptocurrencies and start-ups. In a declining market, one might expect the portfolio to perform worse than our conservative, but the potential for exponential growth is very high. We also expect better performance if the cryptocurrency market goes through a correction. The Binance exchange is particularly suitable for investing in altcoins.
- Notoriety: Binance is one of the largest altcoin exchanges
- Gigantic selection: Binance offers you over 100 different cryptocurrencies
- User friendly: The exchange from crypto to crypto on this platform is very user friendly
- Customer support: The support can be reached by email and is very cooperative
An adventurous crypto portfolio is geared towards big growth in a negative market. Large market capitalization coins are usually left out here as there are other cryptocurrencies that can produce higher multiples of return. In a declining market, however, we expect this portfolio to perform significantly worse than with the big coins.
Our adventurous portfolio consists of crypto projects with low market capitalization and ICO's. These cryptos are positioned so that they would get most of the growth in a negative market. We see potential here for e.g. 25x + profits for some of these cryptocurrencies and are happy to take on the additional risk for this return profile.
- Large selection of cryptocurrencies: Kucoin offers you the opportunity to trade around 150 different cryptocurrencies. The exchange has a reputation for listing exotic cryptocurrencies, including projects that have just completed their ICO's.
- User friendly: We find Kucoin to be one of the easiest exchanges we have ever used, which is likely one of the main drivers of its explosive growth
- Multilingual: This exchange offers translated versions of their website in different languages
- Customer support: Our experience with customer support was particularly good
ICOs are very similar to a risk investment. Here it takes time to separate the wheat from the chaff, and we also recommend that every ICO investor research the project thoroughly before investing.
If you are absolutely convinced of a cryptocurrency project even after doing some research, then the best time to invest is usually the ICO. So we are able to get the maximum multipliers for our investment. However, this upward trend also harbors risks. Unfortunately there are a lot of scam ICO's out there. Projects that only serve to raise a large amount of money for the project managers. This area of cryptocurrencies has a lot to do with high risk and that is why we can only approach ICOs with a clear head.
Tip: We have created a comprehensive guide to ICO's. Here you will learn what to look out for in your research and how to avoid dubious ICOs.
The most important thing in investing is the price at which you enter your positions. Ideally, buy when the graph is down and then benefit from the growth. Easier said than done?
We often use chart analysis to determine our entry point. A good option for this is Live trading view.
We then split the amount we want to invest into fractions and invest a fixed amount every week.
After we take a position we just hold it until the market starts to grow. The key word here is patience. Our strategy is to wait for the total market capitalization for cryptocurrencies to grow and if there is an upward trend, we will also sell fragments of our portfolio for euros every week. In this way, we guarantee ourselves profits and can reinvest them in the market in the future (if it goes down).
This cryptocurrency portfolio strategy sounds simple in theory, but in reality it is relatively difficult to have the discipline to enforce. It requires knowledge and above all experience in the financial sector.
Cryptocurrencies are one of the most volatile investments one can make. Yes, it is possible to make a lot of money with cryptocurrency, but it is also possible to lose money. Most often, the reason for failure is a lack of patience and experience. Emotional sales may be the main reason.
Surely you've heard of all the cryptocurrency millionaires before. They want to be one of you too. In the real world, it takes time for your portfolio to grow, and those bitcoin millionaires you hear about have mostly been around from the start.
Even with cryptocurrencies, it usually takes some time to see success and even then it is not guaranteed. Always remember that with most cryptocurrencies you are supporting young companies and startups.
The Bitcoin News team is for cryptocurrencies and we believe that the cryptocurrency market will completely transform our financial system. We are optimistic about the long-term outlook. For those who decide to invest in cryptocurrencies: We look forward to accompanying you on this path.
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