How to decide the best cryptocoin to invest in 2021?
The father of modern portfolio theory, Nobel Prize winning economist Markowitz suggests diversification and considering risk correlations between securities in portfolio management. When we are talking about cryptocoins, since the investment option is already risky, diversification must be done carefully among alternative investments first of all. Such as bonds, stocks, precious metals, different fiat currencies etc. not only coins.
The first rule is to invest "very little amount of money" into cryptocurrencies. Less then %1 of your assets, maybe even less. Because there is not enough legal ground to defend your monetary rights when "exchange disappears" someday or "get hacked" another day. Cold storage alternatives are also not fully secure because holding them has different security problems, such as data loss risks, keys loss risk, hacking risk etc.
Investing in "high market capital" cryptocurrencies such as Bitcoin, Ethereum, litecoin etc. restricts the possibility of gaining enough profit since "the price increase with the ratio of direct money flow in to that coin". If the market is big, too much money flow into that coin is needed worldwide so that price increase high ranges. For example for a 1 billion usd market coin another 1 billion usd must flow in to that coins market so that the price of that coin doubles and you profit %100.
The best way is to invest in multiple, less known, but best performing altcoins to profit enough with respect to the risk you already take by investing into cryptocurrency market. I say "multiple" because you can manage the risk only by diversification of coins. Some risky coins will fail but some will skyrocket which will be the main source of high profit in this risky portfolio.
So which coins should you invest?
I won't give a list of coin names because it will depend on the time you are reading this blog.
But I will give you some clue.
You must find and select the coins which are ;
1. In top top 100 coin list of coinmarketcap.com when you are about to invest.
2. The coin's rank (the marketcap order) must have been getting higher and higher consistently over the course of at least one year. Not at a spesific time, not last month, not last week. You must see the stability of rising of the coins popularity.
You can use following tools for this:
1. Historical snapshots of cooinmarketcap.com
2. Using nomics.com and comparing the rank of the coin on different datasets.
That is all.
Choose for example 5 altcoins and invest in them and wait enough to see the results.
If some perform bad, simply change them following the same rules to increase the possibility of higher profit.
Good luck.
The father of modern portfolio theory, Nobel Prize winning economist Markowitz suggests diversification and considering risk correlations between securities in portfolio management. When we are talking about cryptocoins, since the investment option is already risky, diversification must be done carefully among alternative investments first of all. Such as bonds, stocks, precious metals, different fiat currencies etc. not only coins.
The first rule is to invest "very little amount of money" into cryptocurrencies. Less then %1 of your assets, maybe even less. Because there is not enough legal ground to defend your monetary rights when "exchange disappears" someday or "get hacked" another day. Cold storage alternatives are also not fully secure because holding them has different security problems, such as data loss risks, keys loss risk, hacking risk etc.
Investing in "high market capital" cryptocurrencies such as Bitcoin, Ethereum, litecoin etc. restricts the possibility of gaining enough profit since "the price increase with the ratio of direct money flow in to that coin". If the market is big, too much money flow into that coin is needed worldwide so that price increase high ranges. For example for a 1 billion usd market coin another 1 billion usd must flow in to that coins market so that the price of that coin doubles and you profit %100.
The best way is to invest in multiple, less known, but best performing altcoins to profit enough with respect to the risk you already take by investing into cryptocurrency market. I say "multiple" because you can manage the risk only by diversification of coins. Some risky coins will fail but some will skyrocket which will be the main source of high profit in this risky portfolio.
So which coins should you invest?
I won't give a list of coin names because it will depend on the time you are reading this blog.
But I will give you some clue.
You must find and select the coins which are ;
1. In top top 100 coin list of coinmarketcap.com when you are about to invest.
2. The coin's rank (the marketcap order) must have been getting higher and higher consistently over the course of at least one year. Not at a spesific time, not last month, not last week. You must see the stability of rising of the coins popularity.
You can use following tools for this:
1. Historical snapshots of cooinmarketcap.com
2. Using nomics.com and comparing the rank of the coin on different datasets.
That is all.
Choose for example 5 altcoins and invest in them and wait enough to see the results.
If some perform bad, simply change them following the same rules to increase the possibility of higher profit.
Good luck.