Building your cryptocurrency portfolio is not a one size fits all solution, and there will, of course, be some room for your own personal preferences. When you start building your portfolio, you need to ask yourself a few questions in order to create a package of holdings which can meet your personal investment goals. Ready? Let’s get started!
Are you more interest in creating a stable and safe portfolio that is less sensitive to market volatility? If that’s the case then you’ll likely want to dedicate the bulk of your portfolio to large-cap coins or tokens.
A large market cap coin is something like Bitcoin or Ethereum, these are the most popular cryptocurrencies, they have big followings, tons of trading volume, and they are generally quite far ahead in their developments and adoption by the public. These coins will still appreciate in value, but not quite as dramatically as some lower market cap assets would.
Generally, older people who are closer to retirement and can’t afford to risk too much of their capital would choose more stable investments. Most cryptocurrency investors are younger, and this means that they can take on investments with a little more risk and reward.
Did you know that there are lots of cryptocurrencies that can provide you with income via staking or dividends? Having a secondary income stream can shield you from economic uncertainty, and while you’re waiting for your assets to appreciate, you’ll be able to collect additional coins for essentially no additional effort. You can do this by investing in proof of stake coins like Ignition coin, which also offer masternodes to produce passive income.
A masternode will require you to run a VPS, but if you are decent with computers you should be able to figure it out. Other tokens offer airdrop style dividends instead, where you will simply be rewarded with them by holding tokens or coins in your wallet. There are various online tools you can utilize to figure out which coins or tokens can offer you the best return for your money.
If you’re interested in achieving aggressive returns, like most cryptocurrency investors are, then you’ll likely need to put your money into some smaller market cap coins. A lower priced coin has an easier time gaining many times on its value than a large-cap coin. There’s just more room to grow.
The problem, of course, is identifying the projects which have the capabilities to actually do this. The sad truth is that many cryptocurrency projects will either fail or simply wallow in obscurity for years due to the fact that they have no marketing behind them, or they lack a dedicated team.
The sheer number of cryptocurrencies that are out there can be overwhelming. CoinToBuy.io alone lists over 1,500 different coins and tokens. No doubt the most exhausting job an investor has is sorting through the enormous amount of projects that don’t really do anything.
This information overload can make it difficult for investors to accurately gauge which projects have a future, and which ones could be a waste of money. Here are some key metrics you can use to decide which ones are worth buying. (CoinToBuy’s tool can help you identify these easier!)
One of the first things you should try to identify is the use case for the asset. What does this coin or token do? Being a cryptocurrency is not enough anymore, and a new coin needs to do something special in order to get noticed.
There’s also a lot of empty ICOs out there that pedal tokens to investors that have no real purpose. Your instant messaging application does not need a token, no matter what the white paper says. Ask yourself honestly, would you use this token? If there’s no use case, then there’s no demand, and without demand, the price can’t rise.
Once you’ve identified an interesting project, it’s time to take a look at the community. Unfortunately, even great technology will fail if nobody knows about it. Investors should take some time to familiarize themselves with the project’s social media platforms. Some key places to check include Reddit, BitcoinTalk, Twitter, Discord, and Telegram.
Every project should be active on all, or at least most of these platforms. How often do they give updates? How many people are actively engaging in their communities? If it looks rather dead in these channels, then it could be a red flag of some serious problems.
The circulating supply is the number of coins or tokens that are currently roaming around the market. If this number is very high it will put downward pressure on the coin. Part of the reason for Bitcoin’s massive growth is due to its limited supply, and if there were more of them, then that price could be very different.
This is not immediately a reason to neglect investing in a project, but new investors should be aware that assets with massive supplies will have a harder time gaining value due to people constantly dumping the coins.
Don’t forget to evaluate the team of the project. Who are they? Are they professionals or community contributors? Are they meeting their roadmap goals? While there is nothing wrong with investing in a community project, you should keep in mind that most of these people are not getting paid.
That means that they can’t dedicate their full time to development, and progress could be much slower. A good team will be on time with their goals, and they will focus on keeping the community updated on their progress.
Branding is important. It’s the first impression investors will get off the project, and with the ease of acquiring a nice website and graphics, there’s really no reason for a project not to have a professional appearance. If the team is not willing to spend a little money to create a decent website, then they will likely be lacking in other areas as well.
Honestly, the only way to find them is through research and hard work. If you visit the main page of this site, you’ll be able to see all of the coins, and then sort them by various criteria such as price, market cap, safety ranking or profit potential. You’ll also be provided with an overview of each of these assets to help you understand what they do.
To get started, select your criteria, and then start browsing through for something interesting to research further. You can make this job a little easier by thinking about the criteria which you identified earlier based on your risk assessment.
If you want to mainly invest in more stable coins, then filter out everything else by selecting high market cap at the top of the list. There are undervalued assets in every category, and it’s your job as an investor to identify these potential gems.
After you’ve found a project that looks interesting, it’s time to see if it’s a good time to put some money into it. If the asset you’re considering was recently hyped all over Reddit, or if it has just exited an ICO then be careful.
Directly after the ICO or an exchange listing is typically when the price of an asset is at its highest. Unfortunately, for many investors they see the price going up, and they buy in just in time to catch the downward movement and lose much of their investment.
Instead, you should look for solid projects that are down on their luck. These are coins or tokens that have possibly experienced a dramatic dip in their all-time high price. Make sure that you zoom out on the chart to get a better look at the big picture, as only examining the daily or even monthly numbers might not tell the whole story.
If you’d like some help in finding assets like these, then you can use ‘sort by potential profit’. This will show you the coins that have dropped the farthest from their all-time high price, and you can begin evaluating them to see if you think that they can get back to where they were previously. This is where you start doing the research that we talked about earlier to make sure that your gem is actually a diamond in the rough, and not just a rock.
Hopefully, by this point, you’ve got some ideas about the kind of portfolio that you want to build, and maybe you’ve even identified some potential investments for yourself. Make sure that you do not choose just one coin or token to invest in. If your project experiences some bad news, then your entire portfolio will be at risk.
Instead, try spreading your seed money across some other projects, hopefully in various marketcaps and sectors. There’s a blockchain project for nearly everything, and it’s worth your time to check out some of the stellar, real-world applications that these platforms can improve.