How to increase your crypto portfolio to a professional level
Trading crypto assets is a tempting enterprise, but it is very risky, because the cryptocurrency market is subject not only to sudden jumps, but also to sharp drops.
Therefore, the cryptocurrency portfolio must be chosen with great care.
If you learn to grow your crypto portfolio as a real professional, you can avoid financial losses during a market fall.
Stronger coins do not pose much risk compared to young altcoins.
You need to adhere to certain rules whenever you select new coins for long-term investments.
Bitcoin vs. Altcoins
Many crypto traders invest only in Bitcoin, because this cryptocurrency has many unique features.
Bitcoin was the first successful cryptocurrency in the world, and it accounts for about 42, 2% of the entire cryptocurrency market.
Many market fluctuations are due to BTC behavior. Such a huge market share makes Bitcoin the safest investment asset.
Many analysts agree that Bitcoin has the least chance of a collapse, unlike other altcoins.
Altcoin is any other electronic coin, except Bitcoin. Altcoins can be powerful investment tools if used properly.
The rapid growth of the cryptocurrency market is largely due to the success of some altcoins, for example, Ethereum, Ripple and Litecoin.
Today in the world there are thousands of cryptocurrencies. Although this gives freedom of choice, it also makes it difficult to make the right decision when you are looking for cryptocurrency for your investment portfolio.
Poorly organized cryptocurrencies can suddenly crash and burn, as happened with Bitconnect.
Therefore, you will have to conduct a comprehensive assessment of the selected cryptocurrency before you decide to invest in it.
In this article, we will give you some tips to help you increase your crypto portfolio.
Total coins vs. Number of coins in circulation
If you want to increase your crypto portfolio as a professional, then you first need to understand how the ratio “Total coins vs. Number of coins in circulation ‘may affect the market value of cryptocurrencies.
It is about supply of demand. The higher the demand for a coin, the higher its price. If demand outweighs supply, then price always creeps up.
For example, the total number of BTC tokens is 21,000,000. After the last, 21,000,000th bitcoin is mined, the issue of BTC tokens will stop.
17,136,912 BTC are currently in circulation. This means that less than 4,000,000 BTC is currently available for mining.
Since the circulating volume almost equaled the maximum volume, we can safely say that the price of Bitcoin is unlikely to rise.
This principle also works with altcoins. The currency is unlikely to go up due to high demand if the supply is very high.
There are also some differences in the project management sector. Decentralized projects do not have a CEO and are managed by the community.
Their codebases are open source, and most of them will have an active profile on GitHub, where everyone can test the project code.
Decentralized platforms are the foundation of the cryptocurrency market. Many people believe that decentralization is the main purpose of the crypto industry.
Bitcoin has no office. BTC is just a mathematical formula that exists in the crypto space.
This makes Bitcoin a true “peer-to-peer electronic settlement system,” as Satoshi Nakamoto wrote in the Bitcoin technical paper.
But do not forget that decentralized projects have a number of shortcomings that you need to know about when you plan to expand your cryptocurrency portfolio.
Firstly, if you were “thrown for money”, or you mistakenly sent funds to the wrong address, then you won’t be able to determine the “source of problems”.
After all, there is no office where you can send a complaint, so no one will compensate you for the loss. Errors in the blockchain can cost you a pretty penny when you deal with decentralized currencies like BTC.
Centralized cryptocurrencies function in the same way as traditional business. Such a currency, as a rule, has a CEO and a main office where you can apply.
Centralized cryptocurrencies are trying to follow regulatory standards.
NEO and Ripple are striking examples of such centralized cryptocurrencies that are designed to meet future regulatory requirements.
Obviously, centralized cryptocurrencies also have their drawbacks. Namely: developers have absolute control over the creation and purpose of your coins.
There were situations when certain sections of centralized currency networks were hacked by hackers, but financial losses were avoided due to the fact that the developers decided to conduct a hard fork of the cryptocurrency in order to invalidate the effect of the old cryptocurrency.
This is exactly what happened with ETH in June 2016, which led to the formation of Ethereum (ETH) and Ethereum Classic (ETC).
Carefully read the technical documents of the cryptocurrency in which you plan to invest.
If the project is detailed and intelligibly NOT described in a technical document, then never consider it for investment.
If the project does not have a technical document at all, then do not even think about cooperation with this cryptocurrency.
The absence of a whitepaper is an alarming bell and the most risky method of increasing a cryptocurrency portfolio.
Whitepaper will provide you with a brief overview of the market and explain the significance (value) of the platform for you as a potential user.
Also, the document should have a section with the technical passport of the project explaining the functionality and logistics of the platform.
Experienced investors choose open source projects for themselves.
This means that any member of the cryptocurrency community can freely evaluate and modify the platform code to make it more reliable and efficient.
A good whitepaper also has a strategic development plan, which gives an idea of how long the project will carry out certain development activities.
The document should also have a section about the team, where you can familiarize yourself with the project management and its developers.
The team must have active profiles in social networks so that they can be easily contacted and ask a question. If you are quickly answered, this means that the project is developing dynamically.
Keep abreast of the latest market changes
Media coverage can greatly affect the rate of a particular virtual currency. Strong cryptocurrencies in every possible way attract the attention of the media by publishing stories and news of the development of the project.
But you also need to check the accuracy of these publications.
Some of the news can be very beneficial for you, for example, when it is reported that a new cryptocurrency has become available on most crypto exchanges.
Grow your portfolio with confidence
Blockchain technology is causing a technical transformation of many industries. And as cryptocurrencies grow in popularity, the technological revolution will continue.