Ideally, investment decisions should be made with a clear head, especially when it comes to cryptocurrencies. Yes, the prices of digital coins often change rapidly and unpredictably. And yes, there is a non zero chance of getting rich in just a few days or weeks, although it is not much different from the chance of hitting the jackpot in a national lottery.
Investments are not a casino, although luck also plays a role in them. It is a long-term game, based on sober calculation and constant market analysis. When choosing an asset, it is important to find one that can be held for the next 5-10 years.
It is important that the chosen digital currencies are understandable, simple, without complicated methods of buying/selling, withdrawal, and exchange. Behind each token is a specific project, a group of developers, and a community of users, which determines the prospects for the future.
At present, the crypto market has entered a correction after the active growth in January-February. This is a good opportunity to buy promising coins, for example, to exchange USDT to ETH.
Diversifying a cryptocurrency investment portfolio
Diversification is necessary to protect your assets. It also helps to increase them in the long term. Considering the total amount of cryptocurrency investments as 100%, it is recommended to allocate 60% of the funds to low-risk coins, 25-30% to medium-risk assets, and the remaining portion to high-risk coins.
However, it is recommended not to allocate more than 10% of the total portfolio to the purchase of digital assets. Additionally, it is recommended to regularly review the portfolio. At some point, it may be advisable to convert FTM to ETH or another more stable coin.
Traditionally, coins from the top 10 by market capitalization, led by Bitcoin and Ethereum, are considered low-risk. Let’s take a closer look at some promising medium-risk assets.
Top 5 medium-risk coins
The Chainlink project brings together blockchains and information hubs from different fields for further use in work. It operates on the principle of oracles. The project is not new and has proven itself well during the cryptocurrency winter. It has several promising advantages:
- A wide range of partnership relations, in particular with SWIFT and Google Cloud.
- Chainlink helps businesses transition to blockchains and is the best guide to the cryptocurrency world.
- Ease of integration and transfer of information from different systems.
The main risk when investing in LINK is competition, for example, from DAI and related projects.
AVAX is a cryptocurrency created to improve financial connectivity between people from different countries around the world. It is used to pay for transaction fees and ensure network security. Additionally, coin holders can earn passive income by staking them.
Recently, Avalanche partnered with Andretti Autosport, and now the project’s logo will appear on cars and race suits. This collaboration is part of the blockchain’s environmental marketing plan and may have a positive impact on AVAX’s price in the future.
Avalanche uses Solidity, Ethereum, and Polygon programming languages, allowing developers to use their knowledge and skills to improve the platform.
Although in 2022 Avalanche failed to outperform ATOM or Solana in performance, the project team continues to work on network development, has numerous grants for developers, and has partnerships with major companies.
Crypto games and NFT trading platforms became the basis for the creation of Flow. This allowed for scaling without segmentation and provided fast operations with minimal fees. By dividing the validator tasks into 4 nodes, Flow significantly improved throughput and provided opportunities for efficiency, scalability, transaction processing, proper operation, and decentralization.
The Flow token is necessary to power the project’s infrastructure, network, and applications. It is a separate method of payment and a reserve asset for the ecosystem created on the blockchain with a Proof-of-Stake model.
As the NFT and gaming sphere continues to evolve, Flow could show good growth in 2023, especially given the development of the project and the presence of a strong team.
DYDX is the token of the eponymous decentralized exchange (DEX). This project is in high demand and the exchange is actively developing, adding new tools and features. With the development of cryptocurrencies, many countries are starting to introduce control, bans, and regulate financial transactions. As a result, the future lies with decentralized platforms where you can trade and invest without a regulator.
Currently, the price of the DYDX token ranges from 1 to 1.5 dollars. Analysts believe that in the medium term, the coin can rise to 20-30 dollars. DYDX can be staked to earn additional income of up to 25% per year. The main risk of investing in DYDX is competition with other DEXs and centralized exchanges.
Neo is a blockchain project created in 2017 under the name AntShares. The main goal of the Neo ecosystem is to tokenize any assets, including securities, real estate, metals, etc. Using smart contracts, the creators plan to digitize elements of the real economy and provide the ability to buy and sell tokenized assets. The NEO cryptocurrency is the main asset of the project and is not subject to mining. There are 100 million coins in circulation.
Users can create blockchains using a minimal amount of energy thanks to the asset and network upgrades. Some experts believe that in the future, Neo may surpass Ethereum in all parameters.