Crypto Portfolio

The Most Important Thing to Consider When Building Your Crypto Portfolio

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Building your crypto portfolio. The fundamental mistake most new investors to crypto make is measuring your investment in dollars, rands or the paper currency of your country. That's not to say that you shouldn't consider it but rather that the new benchmark for all of crypto and I would argue (controversially) all of finance too, is bitcoin (BTC). In other words any coin/asset you buy needs to outperform bitcoin over the length of your investment, otherwise you might as well have just held bitcoin instead. Make sense?

Lets take a look at some examples.

Example 1:

Here is Stratis in dollar terms vs Bitcoin over a 3 month period in 2017. 

StratisUSD

Stratis

BTCUSD

Bitcoin vs USD

Over this period stratis gained 19 000% while bitcoin gained 200%. In this case it was clear that holding Stratis over this period would have made you a lot more money.

Example 2:

Here is Steem vs both the dollar and Bitcoin from 2016 to early 2018. Steem is the popular social media site where you get paid in crypto for value you bring to the network. The community, through an upvoting system, decides who brings in the best value content.

SteemUSD

SteemUSD

SteemBTC

Steem vs BTC

As you can see, steem appreciated 415% over the dollar during this period. Bitcoin on the other hand appreciated over 1500% vs the dollar. In effect it would have been better just simply to hold bitcoin. Your crypto portfolio would have seen 3x as many gains. This effect is observed for a large majority of coins since crypto is a highly speculative market and the risk of most coins failing is quite high.

Also keep in mind that your fiat gateways (paper money crypto exchanges) like coinbase, luno and gemini don't provide fiat exchange for most coins except the most popular and liquid, ie. Bitcoin, Ethereum, Bitcoin Cash, Litecoin and Ripple. There is still a lot more money that could flow through these gateways as word of the crypto revolution spreads and institutional investors start seeing the potential gains available.

The New Crypto Portfolio Benchmark

The takeaway from all of this is that Bitcoin is the new benchmark you need to base your crypto investments from. I'll cover more about risk profiles in another post but for now, make sure any investment you make has good growth potential vs Bitcoin instead of just the Dollar. Just about anything in crypto is appreciating against the dollar as the US keeps the printing presses rolling, showering us in a sea of worthless paper.

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