Financial bubble or the future of money? Bitcoin and other cryptocurrencies has been in the center of media attention for a long time, especially after wild bull ride in 2017. In fact Bitcoin in those years became the most profitable investment asset of all. It attracts attention of many investors as a risky, but profitable alternative to other traditional financial assets. Today let’s look some options we got when it comes to investing in crypto.
What is crypto investing?
First of all, cryptocurrency investment is an action of converting fiat currency into crypto tokens and holding it with the expectation of achieving profit. By the way, other forms of transactions as investing in crypto mining or newly introduced crypto hedge funds are also considered as investment into cryptocurrencies. Unstable crypto market requires for any investor to have proper diversification of their portfolios. So, how one should diversify his cryptocurrency portfolio to get stable return?
There is no right answer to that question, it depends on what are the investing goals, how much risk is tolerated, what is the investment size and many other factors. So, today let’s look at the possible crypto investing options.
In crypto market there are over 1200 different tokens and that number is growing every day. Some of these coins are dead-coins (check full list here: https://deadcoins.com/), some of them are dying and only a few are worth investing your time and money. So, this is my list of cryptocurrencies that are worth holding in 2019:
Development of the ETH is ahead of the crypto market. Currently it hold second place by capitalization of all cryptocurrencies and can offer fast transactions, smart contracts, extra security. As a result, ethereum is the future of crypto and good adition to your crypto holding portfolio.
World’s first decentralized pool, REN offers crypto market to transfer value between different tokens. REN gives market more liquidity and faster data exchange. Therefore, what is important to investors, REN is in uptrend right now, meaning that market believes in its cause and are willing to invest money into development.
Ripple Blockchain is used by big banks such as Bank of America or UBS as open source protocol for the payment network. When such big names starts research in the technology, it add a layer of trust to Ripple Tokens XRP as well.
Crypto hedge funds
Hedge funds are one of the most popular investment options of retail investors. There is a long list of funds available and while there is a huge competition fund managers have to push themselves out of the box. As cryptocurrencies began their huge rally, to some managers it appeared as the Holy Grail. Consequently, first Crypto Hedge funds were instituted.
What is crypto hedge fund? It is different from an index fund, because hedge fund is actively managed. Cryptocurrencies are carefully selected and portfolios are re-balanced often by data analysts and professional fund managers. This lets hedge funds to outperform index funds, sometimes not so much.
By sometimes, I mean that crypto hedge funds not always have the professional management. Portfolios of the funds could be created just by managers sentiments or subjective believe in technology itself. In fact, there is really small number of professional crypto fund managers and market is dominated by technology optimists with no objective view of the market whatsoever.
If you are picking the crypto hedge fund, find an answer to these questions:
- Does that fund outperforms crypto index?
- Does the fund manager have other arguments of picking cryptocurrencies beside his/hers believe in that particular technology?
This will eliminate half of the funds instantly.
Investing into crypto mining
Mining is the backbone of the blockchain technology, by verifying transactions miners help network to grow. As a result, for this kind of service participants are rewarded with tokens. Without going too deep into how mining works, all you need to know is that you can invest into mining equipment and start mining at your own home, or invest into mining pools.
One thing that you should consider before investing is that mining business is profitable only in a bull market. Also, mining profitability highly depends on electricity prices, so you should also acknowledge the region that mining equipment is physically in. Government decision to rise electricity price even by a few percent could significantly lower your profits.
In this we have discussed some crypto investment options. Simple fact is that if you want to invest into cryptocurrency market you have to do in depth research on your own.