Let’s be honest, cryptocurrencies wouldn’t have existed if it weren’t for Bitcoin. The creation of Bitcoin and its underlying technology- Blockchain – kickstarted a diverse industry of coins and tokens that leverages on this revolutionary technology to solve real-world issues. Bitcoin’s status as the ‘Founding Father’ of cryptocurrencies will always prevail. Bitcoin is currently the largest cryptocurrency based on market cap and makes up over 50% of the entire cryptocurrency world. It would be fair to say that the entire cryptocurrency market is highly correlated to Bitcoin’s price movements.
Bitcoin is also the default base currency of the cryptocurrency world. Anyone that wants to buy any other altcoins or tokens, would need to purchase Bitcoin first in order to easily acquire any other coins. This is because local cryptocurrency exchanges usually limit the amount of coins that can be purchased by local fiat money.
By holding some percentage of Bitcoin, you can give a balance to your investment as a market downtrend or uptrend will almost always be initiated by Bitcoin. It is important to have a part of your portfolio in Bitcoin.
RECOMMENDED HOLDINGS: 25% – 33% OF YOUR PORTFOLIO
THE MOST POPULAR: ETHEREUM
It is no surprise that Ethereum is one of the most popular coins in the cryptocurrency world. The Ethereum blockchain is the most actively developed blockchain in the industry, spearheading many innovations within the industry. Over 85% of the tokens in existence is built on the Ethereum blockchain, therefore solidifying Ethereum’s position as the most credible blockchain platform currently in the market. Although there are several notable blockchain competitors like NEO or WAVES, Ethereum still holds the fort in terms of development and credibility.
Ethereum is also one of the coins that is used alongside Bitcoin as a base currency since it is much faster than Bitcoin. The utility of Ethereum is also correlated to its price; the more developers and projects built on Ethereum, the higher the demand for ETH coins, which will lead to a price increase. Having a portion of your investments in established and credible coins such as Ethereum is vital in stabilizing your portfolio.
RECOMMENDED HOLDINGS: 15% OF YOUR PORTFOLIO
PASSIVE INCOME PROVIDER
There are some coins and tokens that help investors to earn passively. These coins and tokens – apart from their inherent values – also conduct regular distributions monthly, quarterly or bi-annually. They will reward you with free coins just by holding on to your current coins. This is also known as interest-bearing coins. Stellar, Bankera and NEO are examples worth looking at here. While NEO is more widely known for free distribution, Stellar is shockingly lesser-known in this regard.
Another example of passive coins is ‘free coins’ that you can get through airdrops and hard forks. Airdrops is a way for projects to market themselves by giving out free coins. An example could be when a cryptocurrency project issuing their native coins to holders of Ether (ETH). Hard forks, on the other hand, represent coins that are duplicated and issued by a coin that wants to deviate or move away from an existing coin. An example is Bitcoin Cash (BCH), which separated from the main Bitcoin (BTC) chain due to differences in ideology. In that case, holders of the original BTC would automatically get an equivalent amount of BCH for free!
By holding a good portion of a passive income earner token, you will be rewarded regularly for keeping faith with the brand. As a keen investor, you want to be in a position of having a mix of risk in your portfolio ranging from high to low. A passive income earning-token is a must-have.
RECOMMENDED HOLDINGS: 25% OF YOUR PORTFOLIO
THE MARKET HEDGER: STABLE COINS
The crypto scene is notorious for price upheavals and it is only right for you to ‘hedge’ or mitigate your risks. The likes of stablecoins such as Pax, TrueUSD , USDC, and Tether are known as stablecoins as they are tied to fiat currencies and shielded from the crazy price swings of the cryptocurrency market.
Stablecoins are a great way to protect your portfolio from volatility and provide you with much-needed liquidity (or ‘cash’) whenever you have a need. Imagine putting all of your money into cryptocurrencies and the market takes a deep dive; you would lose a major portion of your investments. It is therefore important for you to always keep a portion of your portfolio in stablecoins so that you can cash-out when needed or simply buy more cryptocurrencies when prices take a dive. This action plan will also prevent massive losses in your portfolio.
Renald Walsh jr | Investment
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