How to Create A Crypto Investment Portfolio?
As the saying goes, "Don't put all your eggs in a basket", which means risk management is vital of importance on investment. No matter what role you are playing, an average investor, a professional trader, or even a beginner in crypto. High returns mean high risks. So how to establish an appropriate investment portfolio, and how to establish your risk management system, are the key topics that we'll discuss in this content.
What's an investment portfolio?
An investment portfolio is a combination that consists of at least 3 or more investment products in different proportions. For instance, in the traditional financial industry, you can make your investment portfolio by the stock market(30%), Gold(20%), Gas(20%) and even foreign exchange(30%). Therefore, in the crypto world, an investment portfolio means different coins or tokens are made of a combination.
How to establish an investment portfolio?
If you are an average investor, your aim would be a holder of Bitcoin rather than a holder of altcoin due to Bitcoin's high value and high consensus. However, crypto beginners or newbies, are likely to choose an altcoin in terms of the balance between high potential of interests and potential risks. Currently, Bitcoin's market capitalization value has hit $758,000M and turned back 51% of all the market capitalization. It's a big indicator showing that the next upcoming bull run is coming. Imagine this, if you have $1M, what's your target aim in crypto?
Case 1:
Your assets: 1,000,000 dollars
Target coins: $Bitcoin
Current price: $38,739
In total: 25.81
Your profits:
If $Bitcoin raises 100%: $1M; Bitcoin's price: $77,478; Market capitalization: $1,516,000M;
If $Bitcoin raises 200%: $2M; Bitcoin's price: $116,217; Market capitalization: $2,274,000M;
If $Bitcoin raises 300%: $3M; Bitcoin's price: $154,956; Market capitalization: $3,032,000M;
If $Bitcion raises 500%: $5M; Bitcoin's price: $232,434; Market capitalization: $4,548,000M;
If $Bitcoin raises 1000%: $10M; Bitcoin's price: $426,129; Market capitalization:$7,580,000M…
Case 2:
Your assets: 1,000,000dollars
Target coins: $TIA
Current price: $8.5
In total: 117,647
Your profits:
If $TIA raises 100%: profit $1M; TIA's price: $17; Market capitalization: $2,580M;
If $TIA raises 200%: profit $2M; TIA's price: $25.5; Market capitalization: $3,870M;
If $TIA raises 500%: profit $1M; TIA's price: $51; Market capitalization: $7,740M;
If $TIA raises 1000%: profit $1M; TIA's price: $93.5; Market capitalization: $14,190M;
If $TIA raises 2000%: profit $1M; TIA's price: 178.5$; Market capitalization: $27,090M.
With these two cases, which one would be easy to achieve? It's obvious that case 2 can be easier to achieve due to a lower market capitalization. According to the listed case, even when $TIA raises 2000% with the price at $178,5, the market capitalization is only $27,090M and ranks at 7th. In conclusion, if we wanna make a prediction on a product, market capitalization prediction is a good way.
How to do risk management on investment?
Achieving a good status in making profits, requires high professional skills of trading and analyzing. Most investors realize that risk management is vital of importance on investment. However, no one can guarantee that his strategies can work continuously, and no one can guarantee that he can make profits all the time. Although risk management cannot be effective in the long term, basic rules can still make your investment more secure. Therefore, it is particularly important to do a good job in risk management. Here are some tips on risk management:
Don't put all your money in a product; Don't get involved in products that you don't understand; Don’t trust other people’s investment opinions, even if they are your friends; Don’t try to get rich overnight. Becoming a millionaire overnight is just a myth. In reality, it rarely happens； Stay curious, stay cautious, stay calm, and be patient. If you can do what I mentioned above, you will make profits easily and effectively.
Disclaimer: And as a final reminder, this is not financial advice and it’s just for educational purposes only. Please do your own research and find out what investments are best for you. Cheers everyone! In the crypto world.
