Hello professor @fredquantum today i will be presenting my homework on the topic assigned by you and i truly believe that this homework will be helping many people for diversification of there crypto assets.

1. Explain Crypto Assets Diversification.

Crypto Asset Diversification:

Diversification in general terms means to divide your assets in different cryptocurrency to eliminate the risk of complete wiping out of your funds as when your entire portfolio is in one cryptocurrency then it has high probability to get wiped out in case any miss happening with that particular cryptocurrency.

It is always advisable to diversify you crypto assets which means to invest your amount in more that 3 to 4 cryptocurrency which will eventually reduce the risk of your funds getting completely wiped out.

For example: I have a budget of 1000$ so rather putting that 1000$ in 1 single coin i will put those 1000$ in 4 coins equally or in any other proportion in which i am comfortable with.

Now suppose in 1 coin i have face huge loss or it gets to zero still my portfolio will not be fully destroyed as i will be having my investment in 3 other coins which will be helping me eleminate risk.

Few months back i have invested a part of my holdings in R-Planet game may be you might have heard about it and after i invested it's value went down by almost 1/100 giving me huge loss and if i would have not done diversification then surely my entire portfolio would have become zero.

So Crypto Asset Diversification is very important aspect and one should always do it eleminate the risk as much as he can.

2.What are the Benefits/effects of Diversifying one's assets?

As discussed above we can easily see that if we are not doing diversification so one cryptocurrency can lead to complete wiping out of your portfolio which might have happened with me if i would have invested all my money into R-Planet game but as i have not done so it have helped me save my portfolio. This is one of the major benifits which one can derive from the diversification. As it saves your portfolio from completely getting wiped out from the market.

When you invest in more than 4 cryptocurrency it helps you have more exposure towards the market as every cryptocurrency has it's own userbase and the potential to grow so even if 1 or 2 of your cryptocurrency will not be giving returns still the other one might give you good returns almost maintaining your portfolio and giving positive returns on it.

Also one must focus not to diversify there funds in more than 4 to 5 cryptocurrency as for example if someone have diversified there assets in suppose 15 cryptocurrency so it will be not at all possible for him to keep the track of every cryptocurrency which might lead him to loss due to unawareness of that project. So max to max 4 to 5 assets are good as you can easily track them and make decent profit out of it.

3.Construct Crypto Assets Diversification according to the 1 - 4 Rule - Choose 4 crypto asset (State the reasons for choosing them), discuss each of the assets, and perform a detailed fundamental/technical analysis on them. Invest a part of at least 15 USD into each of the assets based on the diversification constructed earlier, proper stop loss and take profit levels must be put into place. A real trade on a centralized exchange is expected here. (Graphics/Screenshots/Charts are required). Note that: You are expected to show your verified account screenshot, your reservoir and the steps involved while investing (For example, if you are investing a part of 15 USD at a time, then, the reservoir must have been 60 USD clearly shown, you can use Fiat or Stablecoin for construction). Kindly take note.

I will be doing diversification based on 1-4 rule and hear is my binance account verified account.

Now i will be showing you my holdings and the 4 coins in which i will be investing my 60$ in 4 equal parts.

As i have only 1 binance account so it was not possible for me to transfer my existing holdings somewhere so hear is my 60$ which i will be using.

So the 4 cryptocurrency which i will using for this purpose is:

1. Solana

Solana popularly known as Sol has been one of the most trending cryptocurrency in recent times and we must not forget the amount of returns which it has provided is truly unbelievable i am not that big fan of Technical analysis rather i prefer to have a proper fundamental analysis and as per my fundamentals this coin is super strong and one must have some part of your holding in it.

I have bought around 15$ worth of Sol at the price of 159.39$ in which i got 0.09 sol which you can see in my wallet.

As Sol has the fastest transaction speed giving it an outer edge over other cryptocurrency making it an must have coin in your list. I believe that it can easily be double from this price point and i will be holding it until my target gets achieved.

2. Ava( travala)

Ava have come into the market with an amazing concept of booking flights hotels or any other activities which we tend to do whenever we are on vacation so they help us find the best rates and that too with the help of there native token which is a great way to travel the world and that too with the help of cryptocurrency.

I personally have choosen it just because of the hige travel industry ahead but as due to covid it has got some serious hit so i believe that when the world will be open for global tourism it will definitely be one of the most booming cryptocurrency you can see around so as per the adoption as well it's an must have crypto in your list.

I have bought it at the price of 3.078$ and made an investment of 15$ in it too and got 4.8 Ava tokens.

For me i easily see it achieving around 10$+ mark easily when the global economy will be open for tourism helping the token to boom.

3.Trx

Tron is a coin which i like just because of it's founder Justin Sun who is really an great social media influencer who has to potential to pump any coin with its tweet.

Also as we can see there are many dapps being build over the tron ecosystem as it is very cost effective making it completely feasible for the projects to run on it with less cost.

I have bought around 165 coins at the rate of 0.093$ which is quite undervalued.

We all are aware of the potential which Justin Sun has and with so many upcoming developments with the trx blockchain it is quite evitable that trx will easily break it's all time high and probably reach over 0.3$ as per my prediction for its future.

4.Axs (Axie infinity)

Axie Infinity has been a great gaming project which has given its users extra ordinary returns with some super gaming experience and i have been following it since last couple of months.

I have started to understand about the Axie infinity game from while and as it requires a huge amount of investment so i have dropped my plan to invest in and play.

As the project is having huge potential so it is quite obvious that we will definitely see it's price growing in long run so investment in it would yield us good returns.

I have bought around 0.13 axs at the price of 113$ which is quite huge as the price has pumped quite well in the past 24 hours. Still it has the potential to reach around 500$ mark in long run if everything goes well in the market.

I have done my investment based on my fundamentals as i don't believe much on Technica analysis still if someone is looking towards some strong coin might look towards it so this was my analysis and investment in 4 equal parts.

4.Explain Arbitrage Trading in Cryptocurrency and its benefits.

Arbitrage Trading:

When we trade any cryptocurrency then different prices are available on different exchanges sometimes the difference is small and some time it is huge and when the traders take the advantage of these differences and make sure shot profits is called arbitrage trading. In simple words when the trader takes the advantage of price difference on two exchanges and buy that crypto from the exchange selling it at lower price and then selling it to the exchange with higher price is termed as arbitrage trading.

Arbitrage trading can really be very profitable provide you have some good amount of capital as if we will be doing it with small capital then it will rather be a deal of loss just because of the crypto fees which we must take into consideration.

Arbitrage trading is not that easy as people need to be very active and fast in order to catch up the winning trade. There are many bots in the market which have been created in the market just for the sake of this type of trading.

There are many risk as well attached to it as cryptocurrency is subject to huge ups and downs and suppose you have buyed a cryptocurrency at Exchange 1 at 1000$ and at that point of time it was trading at 1100$ on Exchange 2 and when you withdrawn your funds on Exchange 2 the market saw a huge correction and your asset value falled to 900$ so in this case you will be incurring a loss of 100$ so it is not that easy how it appears to still it's an profitable area if done properly and with proper timing.

5.Discuss with illustration how to take advantage of Exchange Arbitrage.

For making an successful arbitrage trade one must be very active in the market always looking for opportunity and the difference in price.

I have used coinmarket cap for it and as i was tracking SBD. so i found an Arbitrage opportunity there.

You can see that on bittrex the SBD is trading at 6.59$ and on upbit it is trading at 7.01$ which is a sure shot profit of 0.4$ on every coin.

Suppose i invested around 6590$ in it and got 1000 SBD in it and now when i will sell it on upbit so straight away i will be making a profit of around 400$ which is great. So that is how arbitrage trading is done.

Few things which every one should keep in mind:

• Always consider the transaction fees and then excute a trade as if suppose withdraw fees is around 200$ and in total you are making a profit of 230$ then just for 30$ it is not worthy to take trade.
• Set up different bots which will help you stay updated in the market.
• Always do arbitrage trading between some reputed exchanges.

So these are few points which one should keep in mind to make some great trades.

6.Creatively discuss Triangular Arbitrage in Cryptocurrency. How to identify Triangular Arbitrage opportunities and the risks involved.

When arbitrage trading is done between more than 2 pairs then it is called triangular arbitrage.

As finding triangular arbitrage setup is very difficult so i will be explaining it with the help of one example.

let's take 3 pairs.
Pair 1= Steem/Usdt= 0.55
Pair 2= Usdt/Euro= 1.2
Pair 3= Steem/ Euro= 0.42

Now for example i have 100 steem which i will sell in usdt terms for 55$.

From those 55$ i will convert them in euro 55/1.2= 45.83 euro.

Now i will buy steem in euro terms 45.83/0.42= 109.11 steem.

As you can see i have made a profit of 9 steem with the help of triangular arbitrage trading though it was an imaginary scene as it is very difficult trade setup to find.

Conclusion:

It was an great lecture professor as i got the opportunity to know about arbitrage trading in depth making it a completely value addition for me. From now onwards i will be looking forward to some of the arbitrage trading to make some extra profit from it.

Once again thanku professor @fredquantum for hosting this wonderful lecture.

Thank you.

Stay Safe