Tip 6: Correct diversification
In order to have the best possible chance of success, your portfolio should be slightly diversified. And this in several aspects. A good mix of coins/tokens with high, medium and small market caps is key. Coins with a high market capitalization such as Bitcoin or Ethereum provide a certain stability and “security”, while “small” altcoins theoretically have more growth potential. Depending on the risk appetite, we recommend investing 40-60% of the deposit in high market capitalization coins. Investments in “smaller” Altcoins are made with a lower weighting. Diversification by market is also important. It makes little sense to invest everything in projects that have the same ultimate goal, such as Verge, Monero and Zcash. They all want to be an “anonymous” form of payment. Scatter into the different industries that Blockchain companies want to penetrate, such as data storage, lending or interoperability.
Tip 7: Consider influencing factors and psychology
The crypto currency market is subject to very high volatility. It is important to understand that this has always been the case since the launch of Bitcoin in 2009. In investment markets, whether stocks or crypto, people trade and so the markets are subject to psychology and the alternation of fear and greed. Consider patterns that have occurred in the crypto-currency market in the past because there is a chance that they will repeat. Pay attention to news and media reports about Bitcoin and Blockchain, as these can further increase people’s fear or greed. Don’t forget the additional influencing factors like the general economic situation, tax deadlines, etc. Try to recognize the next development and application trends such as Stablecoins, Security Tokens or Oracles at an early stage.
Tip 8: Check product progress
It is common for block chain startups to publish a so-called “roadmap”. This contains information on when the company intends to fulfill certain goals and tasks. We recommend that care be taken to ensure that these fundamentally important development milestones do not take place too far in the future. Already completed and functioning products or services are a big plus.
Tip 9: Identifying partnerships
If the coin/token has strong partnerships with “established” other blockchain start-ups or large established companies from the economy or has already paying customers and users, this is positive. This should also be included in your decision-making process.
Tip 10: Examine community and marketing
The best product is of no use if nobody knows that it exists. Notice how diligently coin publishers post updates on social media. How actively do the owners respond to questions from the community? How satisfying are their answers? Check the size of the community and their commitment, e.g. by looking at the number of members in the Telegram Chat. These factors round off your overall picture in the assessment of the coin/token.