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How to create an investment portfolio from the Altcoins in 2018?

01 Nov

 

How to create an investment portfolio from the Altcoins in 2018

By early 2018, the total capitalization of cryptocurrencies exceeded $500 billion. The value of digital coins has increased many times in the last year. Investors are paying more and more attention to digital money. Large investment funds specializing in cryptocurrencies have already been established. There are a lot of people who want to invest in a fast-growing market. The bulk of the investment goes to Bitcoin, which accounts for more than 40% of the capitalization. But investing only in Bitcoin isn’t wise anymore.

Read it too:

  1. «Cryptocurrencies with huge growth potential in 2018. Part one. Monero, Ripple and Dash.”
  2. «Cryptocurrencies with huge growth potential in 2018. Part two. NEO, Stellar Lumens, Zcash»
  3. «Why would Bitcoin Cash defeat Bitcoin?»
  4. «How to choose the right cryptocurrency exchange»
  5. «What happens to Bitcoin in 2018?“»
  6. «The future of IOTA: Why does Tangle beat Blockchain Iota’s forecasts for 2018»
  7. «How to Buy Bitcoin Online. ” Fast. | ” The best 5 ways to do it»

It is much more reliable and promising to form an investment portfolio of cryptocurrencies. Thus, it is possible to reduce risk and increase profitability. This is not a new method, it is always recommended to buy shares of different companies when investing in the stock market. But in terms of profitability, the portfolio of investments in cryptocurrencies far exceeds the shares of any company. The difficulty of portfolio formation is that it is a completely new phenomenon, and the prospects for a particular currency are not predictable. Especially for all the other cryptocurrencies except Bitcoin.

What is Altcoins?

All the cryptocurrencies that appeared after Bitcoin were all called Altcoin. It’s short for “alternative to Bitcoin.” New currencies were created to replace Bitcoin or to improve some of its parameters. Indeed, the creators of many altokoin have managed to make a breakthrough by introducing blockchain technology in various areas of daily life, economy and banking. More than a thousand altcoins have already been released and new ones appear every day. Characteristics of coins that already have value can be found on the Coinmarketcap website.

The difference between altokoin and altokoin

It’s important to understand that most altoinas are just clones of bitcoin with slightly altered characteristics. They differ only in transaction speed, distribution methods and mining algorithms. Most of these cryptocurrencies have no prospects. The only exception is Litecoin, which has more coins and a simplified mining algorithm. The encryption method also differs from that used in bitcoin. This Altcoin was one of the first to appear after Bitcoin, became quite popular and received high capitalization.Particularly noteworthy are the so-called “forks” of Bitcoin – Bitcoin Cash and Bitcoin Gold, which are traded on the market. These cryptocurrencies are the result of a branch from the main Bitcoin circuit. They share a history of transactions. Cryptography is the same, too, and the keys to the wallets are common to all branches. Bitcoin Cash has moved to third place in terms of capitalization and has gained momentum due to increased security and transaction speed. Bitcoin Gold has appeared recently and is trading unstable, but is among the top ten in terms of capitalization.The third group of alto-coin differs in other methods of encryption and block chain building. All such altokoin are designed to solve specific problems in international calculations, economic relations, promotion of modern technologies. The main and vivid example is the Ephirium platform with cryptocurrency Ether. New cryptocoins are being created on this platform, and the ether is being used for internal calculations. This functionality means a high demand for cryptocurrency and therefore Etherium is the second most capitalized. Altcoins with such properties are the most promising for investment.

Selection of alcoins for the investment portfolio

The main indicator of altokin selection for investments is market capitalization. It means the degree of popularity of the cryptocurrency. If it has more than a hundred million dollars invested in it, it is already of interest for inclusion in the portfolio. The main rule of a balanced portfolio is a variety of assets. The main principles of diversification have been developed long ago and they are applicable to the formation of the alto-koin portfolio. A large part of the portfolio should be made up of reliable and secure cryptocurrencies, the largest in terms of capitalization. Approximately one-fourth of the total can be used to buy promising currencies for which demand is growing. And 5-10% of the portfolio is allocated to risky currencies with growth potential.The Coinmarketcap website displays real-time prices of all cryptocurrencies in dollars, market capitalization and trading volumes for the last 24 hours. Altcoins from the top ten of the list are among the most reliable assets for investment. Among this group of cryptocurrencies are Bitcoin clones and forks, as well as coins with other functionality such as Ephirium, Ripple, IOTA and others. This already ensures diversification of the portfolio. But still, when choosing alto-coins from the top ten, you should analyze the trading volumes and charts of price movements of cryptocurrencies. The more volumes, the more liquid and safer the cryptocurrency is. The study of the chart is necessary in order to buy at the downturns, but not at the peaks of the price.Altcoins, which have sufficient popularity and prospects for development, are on the list from the tenth to the thirtieth with a capitalization of more than a billion dollars. To select cryptocurrencies from this group, you should study not only the volumes and graphs, but also other characteristics. The most important of them is the idea of the project, i.e. the purpose of the coin. If this idea is important for the society and solves some problems, the cryptocurrency has prospects. The most famous of the most promising currencies are Monero, EOS, Stellar, NEO, Zcash, Waves. There are cryptocurrencies in this group, which are created to solve similar problems. Therefore, it is important to understand which of the competing currencies is more attractive.The hardest part is to find new cryptocurrencies that have growth potential but are not yet known to the general public. For this purpose, it is necessary to study the idea, the stages of the project development, to evaluate the development team, to take into account the opinions of experienced investors. But a successful investment in such alto-coins can result in multiple returns. Bitcoin was once worth one dollar, too. You just have to take into account that you can lose everything here and not risk large sums of money.

The main risks of investing in altokoin

Investments in cryptocurrencies are considered highly risky. In addition to the usual risks of cost reduction, there are also specific risks here. After buying altokoin at the kryptocourt, it is better to take them out to individual wallets at once. There is a risk of stock exchange hacking and loss of funds stored on stock exchange wallets.Little-known altokoin are at risk of dumping and dumping. First, the price of currency is artificially inflated, and then sold out and the price falls. Most often these are coins with no practical value. As a result, inexperienced investors suffer.The high volatility of the cryptocurrency should be taken into account. These are sharp price fluctuations that can cause panic selling. You shouldn’t sell at the first sign of decline. Statistics show that even after significant declines in the cryptocurrency, it continues to grow. Investing is not trading. If you want to speculate on changes in rates, it is better to open an account with a Forex company, such as Etoro broker, which offers trading in cryptocurrencies.

Read it too:

  1. «Cryptocurrencies with huge growth potential in 2018. Part one. Monero, Ripple and Dash.”
  2. «Cryptocurrencies with huge growth potential in 2018. Part two. NEO, Stellar Lumens, Zcash»
  3. «Why would Bitcoin Cash defeat Bitcoin?»
  4. «How to choose the right cryptocurrency exchange»
  5. «What happens to Bitcoin in 2018?“»
  6. «The future of IOTA: Why does Tangle beat Blockchain Iota’s forecasts for 2018»
  7. «How to Buy Bitcoin Online. ” Fast. | ” The best 5 ways to do it»

Brokers who have Bitcoin trading available 

  1. XM.com
  2. Etoro
  3. Plus500
  4. Instaforex
  5. FXTM

Finally, watch the video about investing in cryptocurrencies.

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