4154 that’s the number of projects currently listed on coin market cap with so many projects to choose from. How can you tell which ones you should buy? Well, I’m assuming that your goal will be to get the highest returns possible. I’m going, being honest, it’s impossible to predict the future, but there are some things you can take into account in this video. I’m going to discuss my process when building a portfolio and to do this. I’m going to discuss a couple of coins and tell you why I chose them. Hopefully, these coins will do well this market cycle, and I’ll discuss why I think that will be the case. I’ll start with every cryptocurrency portfolio’s stability being bitcoin, so no surprise, their bitcoin is the first real cryptocurrency. It’s a decentralized. It’s a great concept and amazing technology. We know that there are already thousands of videos explaining that but what’s really interesting for us that is the return if we go back in time to the moment where I uploaded my first video on youtube, which was on July 11th if you would have bought bitcoin at that moment when it was around 9 000 us dollars.
Best Risk vs. Return Portfolio
your investment would have increased with around 270 seeing that now it’s sitting above 34 000 us dollars, so if you bought, then you would almost have done a 4x by now, and bitcoin is arguably very overextended at this moment in time, not trying to say that the rally is going to stop anytime soon, but you can’t deny that buying now holds a lot more risk than buying back in July for people who are afraid to buy bitcoin or are looking for the perfect time for it well I got some bad news timing the market is quite impossible there are however some strategies you could use when it comes to buying bitcoin I already created a video on that subject, and I’ll add a link to that in the description, and I’ll also add it right here in this video
I go over the dollar-cost averaging strategy, so objectively speaking, bitcoin can get you some great returns. Still, many people claim that it’s a hazardous investment to determine the risk fees to be barred. The sharpie ratio was invented, so what is the sharpie rate? It was developed by Nobel laureate William f sharpie and is used to help investors understand the return of an investment compared to its risk. You can calculate a sharpie ratio by taking the return of your portfolio minus the risk-free rate and dividing that by the standard deviation of the portfolio’s excess return there are, however, some issues when talking about the sharpie ratio in regards to cryptocurrency when plan b mentioned the sharpie ratio of bitcoin on Twitter he got a response from Nasim Nicolas Taleb, who is a famous Lebanese American essayist scholar, mathematical statistician, and former options trader and risk analyst.
Chart Compares Bitcoin
He said that the sharpie ratio does not work for bitcoin so take the following chart that I will use with a grain of salt. So this chart was created by willy woo, and it shows the sharpie ratio of bitcoin compared to other assets. The higher the ratio, the better, so this chart compares the following assets bitcoin gold us stocks, u.s real estate bonds, and emerging currencies. It calculates the sharpie ratio over a four-year hold period. As we can see, bitcoin comes out on top, so this means basically that bitcoin proves to be the investment with the best ratio between returns and risk
as I’ve mentioned before, there are quite some reasons why you shouldn’t take the sharpie ratio of cryptocurrency too seriously. Still, it’s interesting to note, to say the least, so back to our portfolio, um, when you’re building a cryptocurrency portfolio, I, in my opinion, you should start with bitcoin. It’s arguably the one with the best returns compared to the risk. There are charts we can look at to illustrate this point. I’ll start with the bitcoin dominance chart. This chart is a comparison of bitcoin’s market cap with the overall crypto market. If we uh start at the dip earlier this year and we go until now we see that there is a rise of almost 11, uh bitcoin’s dominance is currently sitting above 70 there are multiple approaches we can take uh to prove why bitcoin is arguably one of the best investments in cryptocurrency and one I would like to take by comparing it to altcoins.
The point in Buying Crypto
If we take the bitcoin chart and start at the dip earlier this year, we can see that bitcoin slowly bled versus bitcoin. We can take numerous other altcoins and charts, and the result would be the same. There are always exceptions, so what am I trying to say with this well, if you buy an altcoin, you would want it to outperform bitcoin. Else there was no point in buying it.
It would have been a better move to buy bitcoin, and I understand why you would want to buy an altcoin. If you buy an altcoin with a tiny market cap well,l that would require a whole lot less volume than bitcoin,n for example, to go 10x or 100x, but the point of this video.
I’m basically trying to say is that when you’re building a portfolio, you shouldn’t just try to chase profits blindly. Still, you should also take risk into account uh with the examples that I’ve mentioned the,e sharpie ratio the,e dominance and the charts where altcoins bleed towards bitcoin. I try to illustrate that there’s a whole lot less volatility and risk with bitcoin.