Strategy of Investment

Cryptocurrency
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Strategy of Investment
Vivek Nair | Risk Management | 30th Nov 2017

Thought

There is an old saying, “Do not keep all your eggs in the same basket”. Diversification is the key. It is the same strategy followed in the traditional logic from Mutual fund investments.
−       Just like there are Big Cap, Mid Cap and Small Cap for Mutual funds, we can also categorize Market Capitalization of Cryptocurrencies into Big, Mid and Small.
−       Keep this in mind while investing will help us plan better.
−       There is no guarantee that a particular cryptocurrency will be successful.
−       Also the returns on Investment is different from different Cryptocurrencies

60-20-20 Rule

Only the Bitcoin (BTC) is considered the Big Cap (Big Market Capitalization). So, 60% of the investments will need to be in BTC. This is secure investment with decent growth over time.
Coins like Ethereum (ETH), Bitcoin Cash (BCH) and Bitcoin Gold (BCG) are Mid Cap (Medium Market Capitalization). 20% of the investments will need to be in a mix of ETH, BCH and BCG. This will have greater growth opportunity compared to BTC but there are small risk of failures.
Coins like Veritaseum (VERI), Dogecoin (DOGE), SALT (SALT), Electroneum (ETN), etc. are Small Cap (Small Market Capitalization). Remaining 20% of the investments will need to be a mix of 5-10 such coins. These coins have the greatest growth opportunity but also greater risk. Most of the coins in this category will fail but ones that survive would have the capability to eclipse the entire cryptocurrency investment portfolio.

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