Today, we have something special for you. Our Altcoin Buzz Alpha is making some great calls lately.
And we want to show you why. Today’s article is one of 2 parts where we talk all about our 5 main pillars for investment of our crypto portfolio.
Pillar #1: Where to Invest
In this pillar, we are talking about coin selection. And while this is the most important of all the pillars, we cannot get great ROI without following the other pillars.
- Large Cap Holdings
The foundation of this pillar is in large caps. As I’ve said here many times before, if you don’t hold at least some Bitcoin in your portfolio, then you are doing this wrong. And our Alpha Team believes the same about Ethereum. The Ethereum story, even though many are down on it right now, is especially true if DeFi grows again and the RWA sector hits the way we think it will.
So you have BTC and ETH. Now what? Now we look for high-performing coins in narratives we like. Narratives are part of Pillar 5 on Why We Invest. So that’s coming up later. Some examples we’ve hit on hard in AB Alpha and here in the channel include:
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- Sui , who has been crushing it.
- Solana is one of the best alt performers this year.
- Mantle , to play on ETH liquid staking.
- Bittensor, to play on AI, and more.
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Spread Risk via Market Cap Size
And large caps are important, as you can see. They are or become the leaders in the industry. They should be the foundation of your portfolio. But we can catch big moves if we diversify by market cap and also buy quality mid-caps and small-cap projects.
The further down you go in market cap, the higher risk and reward potential there is. And it makes sense, right? A 10x on Bitcoin takes it from $1.3 trillion to $13 trillion. That’s hard to do when it’s so big already. And almost no one is predicting a 10x in this market cycle for Bitcoin.
On the other hand, dydx at a market cap of ~$700 million or Oasis Protocol at ~$450 million both have a better chance to 10x. That would take them up to $7 billion and $4.5 billion, respectively. If they continue to run their projects well and catch a bull trend, then this absolutely could happen. And the probability is higher than with Bitcoin just due to size alone.
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Add Strategic small-caps
Then going one step further, it’s both a little riskier and even more 10x potential among the small caps. The small caps at under $100 million market cap are currently starting at #435 in market cap. Two of the small-cap gems on our list that you’ve seen us talking about here on the channel include Polytrade and GraphLinq.
Polytrade’s one of the “permissioned” blockchains so regulated assets in the US, UK, and worldwide can tokenize their assets. It’s a play on RWA. Polytrade’s current market cap is only $14 million. A 10x should be easy from here if betting interest continues after November. GraphLinq’s market cap is $28 million.
Again, another good chance for a 10x. But there are more risks that small caps can go to zero, too. One big, wrong move and all that market value disappears. If you don’t remember that can happen, ask LUNA holders. So you need exposure to large caps, midcaps, and small caps. We go over this in much more detail so you get the percentages right for your risk level in our AB Alpha group.
Pillar #2: What to Invest
Our next pillar gets into this on investment percentages a little bit more. Pillar #2 is What to Invest. Or how much of our portfolio do we risk on each investment?
This is an area where crypto often differs from TradFi. A TradFi trader would tell you that the most popular risk management technique is to follow the 2% rule. That’s where you never risk more than 2% of your total account on any one trade.
Now this is for trading. If you are holding long-term, then the numbers are very different. Many of us across the industry use Bitcoin as our general savings to save and earn outside of fiat currency. So of course, that type of savings and investment will be way more than 2%. But if you trade actively, this is a good rule of thumb.
In Altcoin Buzz Alpha , we recommend a mix. You should have at least some of your accounts invested long-term. Projects you expect will be around and making money a year or two from now. And then you should also have some cash set aside for great trading opportunities. For example, we recommended $TAO in late August at $200 and now it’s trading at $550 for a 2.5x in 60 days.
And of course, not all of our trades are THIS good, but we do have a solid track record. It’s the combination of a solid trading strategy and understanding your risk of how much to invest in each trade. You need both to keep you from busting your portfolio or round-tripping like we see SO MANY do. Don’t be one of them. Make a smart plan and trade it.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
