How to create a good #Crypto portfolio for beginners ๐งต
If you ever wondered about what all things you need to keep in mind while making a #crypto portfolio, this is all you need to read! ๐
#altcoins #cryptonews #metaverse #web3 $coti $btc #bitcoinnews $ocean $ftm $eth $sol
If you ever wondered about what all things you need to keep in mind while making a #crypto portfolio, this is all you need to read! ๐
#altcoins #cryptonews #metaverse #web3 $coti $btc #bitcoinnews $ocean $ftm $eth $sol
1/ In this thread I will try to answer some questions like:
1.) Risk management
2.) How many coins in portfolio
3.) What kind of coins
4.) Diversification vs Consolidation
5.) Sectoral Allocation
6.) Passive Income from portfolio
7.) Some of the best sectors and #crypto picks
1.) Risk management
2.) How many coins in portfolio
3.) What kind of coins
4.) Diversification vs Consolidation
5.) Sectoral Allocation
6.) Passive Income from portfolio
7.) Some of the best sectors and #crypto picks
2/ Risk management
A/ The first step of making a good #crypto portfolio is to think about the risk factors (NOT thinking about the returns like most beginners do). Every person's risk taking ability is different and you need to tailor your portfolio basis that.
A/ The first step of making a good #crypto portfolio is to think about the risk factors (NOT thinking about the returns like most beginners do). Every person's risk taking ability is different and you need to tailor your portfolio basis that.
3/ Structure of Portfolio & Asset Allocation
A/ I have divided my #crypto portfolio in 3 parts, One being the core portfolio which has strong coins with really good fundamentals, second being the high risk / reward portfolio and third are Moonbags (which are very high risk)
A/ I have divided my #crypto portfolio in 3 parts, One being the core portfolio which has strong coins with really good fundamentals, second being the high risk / reward portfolio and third are Moonbags (which are very high risk)
B/ Considering that I have a high risk pf, I keep around 50% of pf in Core portfolio, 30% in high risk / reward, 10% in stablecoins and 10% in moonbags. If you are a low or medium risk investor, majority of your holdings should be in the core portfolio and you can set own limits
C/ Within the 3 areas I have a set max. limit that I don't exceed irrespective of my love for the coin. However I don't underinvest either as there is nothing worse than seeing your coin pump and being underinvested
Golden Rule: Overinvestment is bad, Underinvestment is worse!
Golden Rule: Overinvestment is bad, Underinvestment is worse!
5/ No. of Coins in portfolio
A/ One of the key decisions you will have to make is how many coins to have in the portfolio. Here u need to understand the diversification vs consolidation debate.
Golden Rule: Consolidation creates wealth, diversification protects it
A/ One of the key decisions you will have to make is how many coins to have in the portfolio. Here u need to understand the diversification vs consolidation debate.
Golden Rule: Consolidation creates wealth, diversification protects it
B/ If your risk taking ability is high, consolidated portfolios can deliver much greater returns than a diversified portfolio, whereas if you are risk averse a slightly more diversified portfolio works well.
C/ In any case, in crypto when it goes down everything goes down together so realistically diversification doesn't really provide a hedge like it does in stocks and other assets, current market situation is a great example
D/ A consolidated portfolio (less than 10k) should not have more 5-6 coins whereas a bigger portfolio (more than 10k) can look at 8-10 coins. In no case you should have more than 15 coins if you are a small retail investor otherwise you will struggle to beat even #btc returns
E/ If you are a very small investor (1-3k), don't invest in more than 3-4 coins (I see people in this category having 30 coins, don't do it you're never gonna get any returns)
Golden Rule: Buy few quality coins, hold, buy dips and take profits!
Golden Rule: Buy few quality coins, hold, buy dips and take profits!
6/ Type of Coins
A/ Basis your risk, decide what type of coins you want to buy. I like to divide them into in 3 categories
Low Risk - Bigger players like $BTC $ETH
Medium Risk - Large Cap Alts, Top 25 Mcap and sector leaders
High Risk - Alts ranked between 100-300 by Mcap
A/ Basis your risk, decide what type of coins you want to buy. I like to divide them into in 3 categories
Low Risk - Bigger players like $BTC $ETH
Medium Risk - Large Cap Alts, Top 25 Mcap and sector leaders
High Risk - Alts ranked between 100-300 by Mcap
B/ As a rule, I don't invest in coins below rank 300 unless I really like the fundamentals and usually start it out as a moonbag with careful monitoring. Additionally I don't invest in meme coins as i don't considering them investment worthy (Memes are for laughing, laugh)
7/ Sectors
Now while I am a fan of consolidation when it comes to number of coins, its highly important to have diversification when it comes to the sectors your coins belong to.
Golden Rule: Never have too many coins from the same sector as returns can be cannibalized
Now while I am a fan of consolidation when it comes to number of coins, its highly important to have diversification when it comes to the sectors your coins belong to.
Golden Rule: Never have too many coins from the same sector as returns can be cannibalized
8/ Sectors to Consider:
A. L1 Blockchains - These are your core L1's like $BTC $ETH and L1's should definitely be part of your portfolio, your selection should be based on your risk profile however considering I have a high risk portfolio my favs are $FTM, $EGLD and $NEAR
A. L1 Blockchains - These are your core L1's like $BTC $ETH and L1's should definitely be part of your portfolio, your selection should be based on your risk profile however considering I have a high risk portfolio my favs are $FTM, $EGLD and $NEAR
B. L2 Solutions
a/ As traffic on bigger L1's like $ETH grows the need for scalability to keep TPS high and costs low is of prime need and owing to the inherent design limitations blockchains like $ETH can't keep up with demand resulting in high gas fees and slower txn's
a/ As traffic on bigger L1's like $ETH grows the need for scalability to keep TPS high and costs low is of prime need and owing to the inherent design limitations blockchains like $ETH can't keep up with demand resulting in high gas fees and slower txn's
c/ Now considering L2's are gonna play a big part in 2022, this is a sector you should definitely look to have exposure to. Some personal favs are $METIS $SYS $CTSI here but very excited about upcoming ICO's by @zksync and @StarkWareLtd
C. Payments: It's long believed that #crypto will revolutionize the payments industry and while this is yet to happen due to slow regulatory adoption, this is a space growing immensely, with $BTC now being used for payments, adoption is set to increase. Personal favorite is $COTI
D. Metaverse / Gaming:
A. Since the big #Facebook reveal, #Metaverse coins have seen unprecedented hype (and potential), while I use #metaverse as a broader term it has elements on #metaverse and blockchain based #playtoearn #gaming like $AXS and $SAND
A. Since the big #Facebook reveal, #Metaverse coins have seen unprecedented hype (and potential), while I use #metaverse as a broader term it has elements on #metaverse and blockchain based #playtoearn #gaming like $AXS and $SAND
B/ Considering 2022 is going to be a big year for this sector you should definitely have exposure to this sector. Some big names here are $MANA, $AXS and $SAND
My personal portfolio has $Pyr, $Vra and $Ilv however these are extremely high risk tokens and some additional below
My personal portfolio has $Pyr, $Vra and $Ilv however these are extremely high risk tokens and some additional below
E. Interoperability: Future is going to be multi chain and interoperability between chains will be important, we are already seeing that with many projects and bridges coming. this is going to be a hot sector this year and personal favorites are are $Rune and $Any, some more
F. CEX's and DEX's: These are the bread and butter dapps that power trading and #defi and while not a big return giver, some great projects are can always give fantastic returns. Some big names are $BNB, $FTT, $Cake etc. My favorites are $FTT, $INJ and $BOO, some more below
G. WEB3: Another hot sector and while its a keen topic of debate with so many #web3 projects coming up you should definitely have exposure, while there are lot of bigger projects as shown below some of my personal favorites are $Ocean, $Rad and $Prq in the lowcaps
9/ Stablecoins: In #crypto flash crashes are common which is why keeping stablecoins ready in your pf is imp, i keep around 10% to ensure that in case a great buying opportunity comes i can cash in. This is important as during crashes exchanges deposits stop working
10/ NFT: While most people are still new to NFT's this is an area which is very promising (equally risky), with the #Metaverse hype and celebrities behind the #NFT culture, value of a good NFT project can multiply fast. NFT's are not for everyone and are for high risk takers only
11/ Staking & Farming
A. The market always has bull and bear runs but the important thing is to ensure your portfolio is always growing and staking and yield farming can be very helpful to ensure your portfolio constantly grows and allows you to build a source of passive income
A. The market always has bull and bear runs but the important thing is to ensure your portfolio is always growing and staking and yield farming can be very helpful to ensure your portfolio constantly grows and allows you to build a source of passive income
B. Staking and Farming can be very useful in protecting your portfolio during bear markets however they have their own risks and its important you understand them well, do watch my youtube video on #yieldfarming to learn about about it and put your #crypto to work!
So these are some of the tips and tricks to great a solid #crypto portfolio and hope you enjoyed them. If you liked this and found it useful do like and retweet the first tweet in this thread and if you have questions put them in the comments.
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