By the end of May 2018, with bitcoin in TOP-10, the market capitalization of cryptocurrency included Ethereum, Ripple, Bitcoin Cash, EOS, Litecoin, Cardano, Stellar, IOTA and Tron. And if the leading six have long been steadily holding their positions, then at 9-10 there are such crypto-currencies as NEO, Monero, Dash and NEM. Investment analyst Tama Churchhouse advises to keep in bitcoin 30% to 70% of the crypto portfolio. Meanwhile, in late November - during a period of apparent growth - an independent researcher Nick Maggiulli argued that the "optimal portfolio" should only include 2% of bitcoin. At the Reddit forum, bitcoin enthusiasts are advised to hold 75%, 90% or 100% in bitcoins at all. Mindful of the experience of the January swings, everyone must determine the degree of his trust in bitcoin and remember that, although it is the leader in market capitalization, it is by no means the only crypto currency. The rating site of CoinMarketCap includes 1593 crypto-currencies, and I examined the key strategies for investing in altcoyins, highlighting the most promising of them from the point of view of analysts.
Strategy #1Invest in altcoin while it is at the ICO stage. Most likely, at this stage you will pay the lowest price for a coin, especially given the rapid growth in the number of ICOs. After the coin enters the open market, it is likely that the price increase will continue and there will be a surge in investment. It is this moment that will serve as a signal for the sale of altcoin. Thus, you can count on income from 100% to 300% of the investment. If there is no immediate surge in investment, try to sell the coin with 50% or 100% profit. This strategy is perfect for those who plan to invest in several ICOs. However, it is worth remembering about the dangers awaiting crypto investors, and investing only in absolutely transparent projects. In March, the New York-based consulting firm Satis Group published a study analyzing a number of ICO projects. According to the results, 81% of them turned out to be a scam, 6% failed, 5% - did not submit the ready code and only 8% went to the stock exchanges.
Strategy #2Also, you can wait for the release of altcoin to the open market, thereby avoiding ICO mania. Look for coins that are experiencing their first drop in the market. Thus, you have a chance to buy a coin at a lower price than during the ICO. The reason for such a fall could be the simultaneous release of a large number of coins on the market. The coin is usually sold either by holders who bought it on the presale, or by those who received altcoin for free to help in the promotion of the ICO. Remember that such a blowout can significantly distort the market capitalization of the company.
Strategy #3Altoins owners who hold a coin while it passes its first splash and fall can also count on profit. To do this, you need to analyze the performance graphs and look at how the price will move relative to the various indicators. Watch for the "candles" on the chart (they reflect the vector of the price change), and also note the amount of activity to find out which stage is the altcoin - growth or fall. It is also worthwhile to compare the market capitalization of altcoins with similar coins in order to understand whether it is overvalued or undervalued. This strategy is the most reasonable, since you not only evaluate the conditions of the asset, but also determine its direction. It should be noted that this is the most complex and intensive strategy, but it has a significant advantage in the form of lower risks.
Returning to the topic of long-term and short-term investments, it is worth noting that experienced crypto investors warn against the day-trading strategy, that is, from attempts to extract quick profit. In their opinion, now the best strategy is to invest for a long period. Unlike dey-traders who make transactions with crypto-currencies within a single trading session, investors prefer to invest long, meet with fewer risks, are not subject to such high stress and pay less commission fees. And to combat the high volatility of the cryptocurrency, experienced traders use the DSA method (averaging dollar value), which allows them to increase their portfolio by investing a fixed amount in dollars at regular intervals.
How to determine the perspective cryptocurrency?Factors that analysts pay attention to when assessing the crypto currency and its prospects include:
Market shareThe share of each cryptocurrency in the market can be calculated by comparing its market capitalization with the total. The larger the share, the stronger the position of the cryptocurrency in the market. For example, to date, the market capitalization of bitcoin is more than one-third of the total - 37.5%. This ratio can be used as an indicator of the long-term viability of the crypto currency.
Value of utilityTo objectively assess the potential of any cryptocurrency, you need to know the answers to the following questions: what is the practical value of this coin and whether it has a market and users. This is important, since it is possible to understand what cryptocurrencies can become universally accepted. For example, one of the key benefits of ether and blockade Ethereum is the ability to develop and implement decentralized applications (DApps). Today, the DappRadar site has 452 Ethereum applications. While the developers are choosing this particular block to run their DApps, the overall utility of the air will not only be stable, but, possibly, with time, and will grow.
Transaction volumeThe daily volume of transactions shows how much the cryptocurrency is now in demand among the participants of cryptology. For example, at the moment, about 195,115 transactions are taking place in bitcoin per day, at the ether - 799,836, and for the ripple - 809.646. This indicator usually grows with the development of the cryptocurrency, which makes it a promising long-term asset.
LiquidityHigh liquidity, as well as the volume of transactions, shows how much the cryptocurrency is in demand in the market. Moreover, these two indicators are interrelated. Liquidity is determined by the ability of assets to be quickly sold at a price close to the market price. Low liquidity leads to high volatility, which causes a large and tangible price change in the market. At the same time, higher liquidity creates a less volatile market, while the cryptocurrency quotes are already changing not so much.
Technology developmentThis, perhaps, is a key aspect of any cryptocurrency. If the technology on which the crypto currency is based can not fulfill the goals set for it, then in the long term this coin will not survive.
Thank you all for attention!
