If what is sought is exclusively to have a transitory placement and with a view to the short term, it does not seem to be the most suitable moment due to the increase in the probability of a correction occurring that naturally brings with it an accelerated dynamics of generalized growth such as the one shown. currently displayed. On the other hand, if the investor’s vision is rather associated with a long-term and strategic connotation, “timing” would take a back seat, allowing purchases to be thought of as an accumulation nature and not as a search for price.
What are the risks of its value falling dramatically? What would it depend on?
When evaluating the risk of a cryptoactive, it is relevant to be able to differentiate that of a systemic or general type from the specific associated with a particular asset.
In general terms, it is important to take into account that this market is highly volatile with a significant impact on emotional (euphoria, at this time) or social components, and exposure to both price manipulations (depending on the case, to a greater or lesser extent ) product of the influence of “Big hands” as well as potential government regulations at the international level that may affect the purpose of each project, thus affecting its value.
On the other hand, if you focus on each asset, it is important to differentiate cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) o Cardano (ADA), whose existence has a long-term strategic project that bases the perception of value of investors, regarding the NFTs (Non Fungible Token) that do not have a specific associated objective, potentially making their value less sustainable over time and leading to dramatic falls in their prices.
In the balance between risk and profit, to what extent is it advisable to organize an investment portfolio that includes cryptocurrencies?
The convenience of incorporating cryptocurrencies in a portfolio and their relative participation within it depend exclusively on each investor profile. For those with a moderate risk appetite, it might be wise to consider a minority portion of equity exposed to volatility, with a strict focus on solid projects (BTC / ETH / ADA) with long-term prospects.
If you have a high volatility tolerance and consider aggressive risk positions, it could be feasible to increase the relative share of this type of assets and only consider a very small portion in NFTs temporarily looking for price instead of value, with a trading approach rather than accumulation, since that is where the maximum level of risk that we can observe within this market is found.
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BBC
Likewise, it is also worth mentioning that there are some that would allow to have a value protection against variations in the exchange rate such as USDT and USDC (stablecoins), designed for conservative profiles.
In addition to the benchmark cryptocurrency such as Bitcoin, what other cryptocurrencies should you take into account if you want to invest in this market?
Within the current universe of cryptocurrencies, it would be convenient to take into consideration Ethereum (ETH), Litecoin (LTC) y Cardano (ADA).
Regarding Ethereum (ETH), is a 6-year-old project in the market with an approach associated with transactions in the crypto world (smart contracts) and has ETH 2.0 ahead as the great promise, aiming to have a differential compared to similar projects in terms of efficiency , with scalability leaps and lower operating costs.
As an alternative it is also necessary to mention
Litecoin: so far this year it has risen 16 times
(LTC), a project that has been in the market for 10 years (known as the “silver coin”) with characteristics similar to those of Bitcoin (BTC), including its own “halving” (disincentive to mining, giving connotation of deflationary currency) although with better times in the processing of transactions (technologically used in general for operations of large volume / blocks).
Finally, it is worth keeping in mind Cardano (ADA) which is a relatively new project with 4 years of presence, developed by MIT scientists and with characteristics similar to ETH although currently with better efficiency indicators in terms of scale and operating costs, but without having at least a long-term project for now associated.
Corporate Finance Manager of Pgk Consultores, member of TGS Global.
Source From: Ambito
