CEX.IO company blog | Which cryptocurrencies should you include in your investment portfolio?

Alexander Yanyuk, finance expert at CEX.IO Broker, expressed his opinion.

Today, in addition to traditional assets,such instruments appeared on the financial markets,like cryptocurrencies. On the one hand, cryptocurrencies are promising investments with a high level of potential income. At the same time, digital assets require careful analysis. Moreover, the cryptocurrency portfolio must be as balanced as possible so that some digital currencies smooth out the turbulent movements of others.

Similar to the stock market, the cryptocurrency market has“Blue chips” and second-third tier cryptocurrencies. Blue chips certainly include Bitcoin (BTC), Ethereum (ETH), Ripple (XRP). The liquidity of these cryptocurrencies is the highest on specialized exchanges, so there are usually no problems with buying or selling these instruments at the required price. Bitcoin has the highest price stability and is rightfully the main cryptocurrency that others are guided by. Blue chips should occupy at least 60% of the cryptocurrency portfolio, as they are more stable and can keep the balance in case of negative movement of other altcoins. In the most conservative scenario, bitcoin should occupy the bulk of investments in blue chips.

Cryptocurrencies of the second and third echelons can beconditionally divided into risky and extremely risky. DeFi tokens are now extremely risky, but at the same time, and the most profitable, the growth of which is unpredictable, but in some cases amounts to thousands of percent. The share of such tokens in the cryptocurrency portfolio should not exceed 15%. The remaining 25% the investor can distribute among other altcoins, based on their personal preferences and market analysis.

When forming a cryptocurrency portfolio, it costspay attention to Ethereum, the growth potential of which is, according to our estimates, about 60% (up to $ 600) by the end of the year due to the transition of the Ethereum network to a new proof-of-stake algorithm. Moreover, most likely, the rest of the altcoins will focus on the dynamics of ETH, so the best solution would be to increase the share of ethereum in the portfolio to at least 40%, invest 50% in bitcoin, and distribute the remaining 10% among the rest of the altcoins.

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