Twenty cryptocurrencies that could make up a portfolio dedicated to moonshots
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If the traditional investment community thought that investing in bitcoin was risky wait until they discover the cryptocurrency moonshot. Moonshots are cryptocurrencies that have the potential to multiply in value. However, there is a simple but underutilized way to reduce the extraordinarily high risk of investing in moonshots whilst still allowing you to participate in the moonshot craze without losing your proverbial shirt. No longer do you have to base your buying decision solely on a quick scan of Reddit’s Satoshistreetbets.
We recommend creating a portfolio of moonshots. The portfolio we are suggesting will consist of a selection of alternative cryptocurrencies, or altcoins, which we believe offer exceptional value. By building a portfolio of cryptocurrencies, you are immediately reducing your risk.
Let’s take an example of a fictional but realistic scenario. Mr. Smith has recently acquired a portfolio of 10 moonshots. Unfortunately, but inevitably 5 or more of these are likely to fail, 3 will break even, and 1 or 2 will produce a return of 10X. If Mr. Smith acquired his small portfolio for a total of $100, then all he needs is for 1 coin to increase by 10X, and he has broken even, assuming the other cryptocurrencies go to zero, an unlikely scenario. If 2 or more of his prized coins increase by 10X, his portfolio will double in value. Obviously, this is all theoretical, and Mr. Smith could well lose all his money. We shouldn’t delude ourselves, investing in moonshots is similar to gambling but with the odds stacked even further against us. However, if Mr. Smith combines his portfolio methodology with a scientific approach to building a portfolio, then his odds of making money in this market are greatly increased.
For those of you who are interested in using a more scientific approach to selecting cryptocurrencies, this article is your perfect resource. Our aim is to provide you with a starting point to help you build your own portfolio of high-risk high-reward cryptocurrencies. Most of the coins we have selected are small to micro-cap cryptocurrencies, meaning they generally have a market cap below $30M. We believe this is the area that can produce outsized gains and where a certain amount of risk can be diversified by building a portfolio.
It must be stated at the outset that moonshots are at the top end of risk. Bitcoin is by far the ‘safest’ cryptocurrency, however, on a scale of 1 to 10, with 10 being the highest risk, bitcoin would score a 9 compared to other asset classes. This is why when investing in small to micro-cap cryptocurrencies and cryptocurrencies, in general, you should establish a portfolio to spread your risk.
Our aim is to provide you with twenty small to micro-cap cryptocurrencies together with a risk rating, price target, background information, and our opinion on each coin.
This portfolio selection differs from our weekly Micro Cap Watch List, although there will no doubt be some overlap. The portfolio selections have been researched in more detail, whilst the Micro Cap Watch List is designed to provide you with investment ideas which will require further due diligence. However, the same caveat applies to the portfolio selection as with everything to do with cryptocurrencies — Always do your own research.
VIEW OUR WEEKLY MICRO CAP WATCH LIST HERE
An ideal portfolio contains at least 10 cryptocurrencies in which you invest the same amount in each coin. By providing you with information on twenty cryptocurrencies, this should allow you to select at least 5 coins that meet your risk and reward criteria.
Here are a few basic guidelines for making the most of the portfolio selection:
- Always do your own research
- A portfolio should hold a bare minimum of 5 cryptocurrencies
- The smaller the portfolio size, the lower the individual risk score to compensate
- Make an assessment based on your risk tolerance and decide whether investing in small and micro-cap cryptocurrencies is for you
- Pay attention to the target price
- The price targets should be based on your own risk and reward criteria, the price targets provided are only a guide
- Invest a minimum of $50 and a maximum of $2,000
When investing in small and micro-cap cryptocurrencies, there are a number of factors that we must pay special attention to:
- Many teams are anonymous — we try to avoid these although, we realize by doing so we may miss out on a few big wins, it is, however, a price worth paying, in our opinion.
- Exchanges which make a market in smaller cryptocurrencies should be researched before setting up an account. Find out what the community thinks about them. There are some bad ones out there.
- Many micro caps can only be traded on Uniswap. That is not an ideal situation. Be careful to work out the fees and the spreads (the difference between the buy and sell price) before executing your trade. Sometimes these additional costs can be significant and may sway you into avoiding making the trade. Remember, if you feel this way, how many more will draw the same conclusion and avoid that cryptocurrency? This will be detrimental to the growth potential of your coin.
- Check the forums (Twitter and Reddit) and see if the cryptocurrency is being ‘pumped’. If it is, avoid it. All it takes is a few of the promoters to sell, and the price will fall quicker than an ax to the head.
We intend to update this selection every month so please register here for your monthly portfolio selection.
So with all that said…