Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The crypto market ends the week at a total market capitalization of $2,17 trillion. Bitcoin continues to trade at around $62,300. Ethereum experiences no changes and stagnates at around $2,400. XRP is down by 2%, Solana by 1%, and Dogecoin by 3%. Almost all altcoins are trading in the red, with very few exceptions. The DeFi sector decreased the total value of protocols (TVL) to around…
10 Tips for Creating a Killer Cryptocurrency Portfolio
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Cryptocurrencies have long been a subject of debate, including government rejection. However, they are now being accepted as financial tools that can be useful in the global economy. Moreover, they have a high potential for building a better future by providing easier access to capital and finance for all.
Today, the new class of crypto investors is reaping significantly from the cryptocurrency industry, provided they can wade through and come up with a grounded portfolio.
A great portfolio allows investors to track their assets in one location, have real-time data about their crypto holdings’ performance, and compare their performance. Here are ten practical tips to help you create a killer cryptocurrency portfolio.
Examine the Supply
The supply here regards the number of coins in circulation. Like in the law of demand, an excess supply of coins means their value will decrease. Therefore, it is good to check the supply of coins relative to their demand.
The reverse means that the cryptocurrency value will increase, and investing in it could be worthwhile. One significant determinant of the supply level shortly is the coin release rate.
The supply could be relatively low now, but a high release rate could mean it will soon flood the market. Potential investors should thus observe the current number of coins and the release rate. You can add coins that are currently not oversupplied and have a slow release rate.
Diversify Your Investment
Every investment is a risk, and one sure way to minimize the risk is diversifying your investment. There are different ways you can diversify crypto investments, including market capitalization and the industry.
You can categorize the digital assets into high, medium, and low market capitalization and invest different proportions for each category. The high market capitalization can take the largest share, while the medium category follows.
Also, coins take different industries, otherwise known as the coin’s utility. Some common utility types include currency, Bitcoin, Bitcoin Cash, Litecoin, and Privacy, where Dash and Monera lie. Others are Dapp Platforms, Media, and Financial, where Stellar and Ripple can be classified.
The idea is to avoid investing overly in one type of utility. If an industry lags, you don’t want to pull all your eggs in one basket.
Evaluate the Investors and Funding
Examining the investors behind the project helps you know how people perceive it. The investors could even mean more than the amount they are contributing. A big name will always influence the community’s decisions toward the project and build trust.
Kaspersky warns against investing in cryptocurrencies whose project team has no mention in the crypto world. The project also will not go far without enough funding. If the ICO had insufficient funding, the odds are high that it will fail soon.
You can check the number of staff brought on board, which is a significant indicator of their funding. A few personnel could mean the project lacks enough financing, and development stops once the funds are used.
The Whitepaper Matters
While the whitepaper is just an idea that the project team is yet to implement, it is a valuable document to read when developing your cryptocurrency portfolio.
Prudent investors can use the whitepaper to determine whether the project is an utter dream or a realizable vision. You can use the document to check the indicators and see whether the technology is possible or if there are practical and technical grounds for the idea.
Check the Team Behind
A cryptocurrency project should have a grounded team complete with advisors. The advisors may not be active players in daily activities but are significant contributors to the coin’s success.
It should be a well-rounded team with diversity in personnel. Investors should look out for renowned and experienced contributors in the cryptocurrency space, respected designers, and engineers.
Consider digging into the details of the team and checking their profiles and social media handles. Look at the advisors and see whether they are high-profile and influential people in the crypto space. Cryptocurrency projects with solid teams can leverage their potential to maximize the chances of success.
Activity and Development
The best way to determine a cryptocurrency’s development rate and activity level is to check its public code repository. Of course, the number of contributors and their commits rate are the most significant indicators, but the repository organization and number of pull requests also matter.
Investors should analyze the development and activity even for the high market capitalization coins. A high-cap cryptocurrency could also have zero commits or have just one developer initiating all changes.
Also, check whether the developers have clean and documented codes and the code organization. Examine whether they have a test environment and that it is strong enough to execute all code sections. A lack of these elements could mean that the coin may have problems scaling up at some point.
Evaluate the Marketing
Businesses grow from marketing and innovation, and cryptocurrencies are no different. Cryptocurrency marketing is one of the essential elements of digital coins’ success. The development team should have effective marketers to steer campaigns on other avenues.
Marketers should explore all feasible platforms, create meaningful relationships, and gather necessary support. Investors should look for cryptocurrencies that balance marketing and development to avoid hype higher than the project, causing the market capitalization to exceed the coin’s value.
Does the Coin Have Support?
Although the acceptability of digital coins is currently on an upward trend, community support is invaluable. Of course, it does not mean every crypto coin will have many people using it. However, a coin without a strong community supporting it will eventually fall.
It does not mean that investors should only focus on projects with great popularity and involvement in social platforms and discussion boards. Instead, they should evaluate the trends of the community supporting the cryptocurrency, including new coins.
Projects pumping up with growing market capitalization should have matching community involvement in users’ use and participation on social media, major cryptocurrency discussion boards, and forums.
The Timeline
Effective project teams operate on schedules and timelines within which they should deliver specific objectives. Cryptocurrencies are ambitious projects, and every investor wants to know that the team behind them can maintain their course and achieve the set goals.
However, it is essential to evaluate the set timelines and see whether they are realistic. A coin that has existed and is yet to realize its early objectives could signal future instability.
Investors should refrain from cryptocurrency projects with impractical schedules or promising high returns with haste. A cryptocurrency that seems too good could quickly become a scam.
Stay on Top of the News
Cryptocurrency investment is not a one-time ordeal. The industry is still evolving, and new projects will always come up with better technology. Besides, investors need to keep up to date with the trends and monitor their holdings’ performance.
Therefore, it is essential to stay alert to cryptocurrency news and forecast the future of your investments. Investors should also keep gathering credible sources and be ready to change tactics whenever they get new insights.
Conclusion
Most cryptocurrency projects are worthwhile; some are already billionaires from investing in them. The rise of the digital coin and the first few’s success have been inspirational, and today, cryptocurrencies are transforming the global economy. However, it does not imply every cryptocurrency investor is always in for a boom.
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Some people invest and fail, while others succeed. The failures arise out of many aspects, including ineffective portfolio development. However, aspiring investors can now confidently stake in cryptocurrencies with the above portfolio development tips.
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Adam Robertson
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