How to Build a Long-Term Cryptocurrency Portfolio
The first Bitcoin exchange started operating in 2011. However, Bitcoin received worldwide attention only in 2017 when its price hit an all-time high of up to $ 20,000. Now Bitcoin is regaining its fame again, after touching the all time high many times and as high as $ 64,800, equivalent to Rp925 million.
Therefore, many people are starting to pay attention to this asset as well as other crypto assets, because if Bitcoin goes up, other assets, namely altcoins, will also be pushed up. This has caused many people to want to invest in crypto assets in the long term because they are optimistic about the development of the crypto industry.
Long term investments usually take years. However, given the fact that the cryptocurrency market moves too fast due to high volatility, in crypto it can be reduced to a few months or a year.
If we look at the stock market, the legendary investor, Warren Buffet, is a supporter of long-term investing because of the many benefits it offers.
Then how to create a crypto portfolio in the long term?
Market Capitalization
Market cap, or market share, can be defined as the proportion of market cap that a cryptocurrency has relative to the entire market. A large market share usually indicates dominance. For example, Bitcoin's market share is currently around 67% of the total market cap of the cryptocurrency space.
Consider projects that have a market capitalization of more than one billion USD. A project with a small market cap, such as several tens of millions of USD, will be easy to manipulate. However, they also have the potential to develop.
Utilities
When determining whether a cryptocurrency will be here in a few years from now, we need to ask whether cryptocurrency is useful, does the project have users?
One example is the second largest crypto by market cap, Ethereum. ETH's utility value comes from its function that allows developers to build Decentralized Applications (dApps) on top of their blockchain.
Another example is Binance Coin (BNB). BNB is used primarily as a utility token of the largest exchange by trading volume, namely Binance. It is used to pay Binance fees, and also to participate in IEO - Initial Exchange Offer by Binance
Daily Volume (USD) and Transactions
To determine whether cryptocurrency is being used, you can view the daily transaction amounts, as well as their volume. Make sure to distinguish between real transactions and zero-value or spam transactions
Sustainable development
This is an important aspect of cryptocurrency. If the technology behind cryptocurrencies does not serve its purpose, then it is likely that in the long term, they will fail. Therefore, you should choose cryptos that have clear developments and of course have the possibility to continue to perform better from time to time.
News and Market Sentiment
Crypto news reporting about a particular project can affect the price performance of tokens, especially small cap ones. There are projects that are liked by the media, following their great marketing habits, while other projects often go unnoticed by the media.
For the above reasons, it is important to keep abreast of cryptocurrency news related to the project you wish to include in your portfolio, as well as to track market sentiment. It is also recommended to subscribe to updates on the project website to receive development updates.
These are just a few of the indicators that you can use to determine the long-term viability of cryptocurrencies
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