Best Cryptocurrency to Invest In – Building Your Portfolio

best cryptocurrency to invest in

In this article, I’ll talk about the best cryptocurrency to invest in when building your portfolio, the way to construct a portfolio and where to hold it.  Whether you are looking at the top cryptocurrencies as a longterm investment or just want to know about the safest cryptocurrencies, this beginners guide will get you started.

I’ve been trading digital currencies for the better part of five years. Over this time, I’ve seen a range of new crypto coins come to market, and now, in the present day, there are somewhere close to 1700.

Out of the thousands of digital currencies out there, how do you tell the difference?

If you're putting together a portfolio to invest in cryptocurrencies, it’s a good idea to look at it the same way you would look at the stock market.

There are some sectors within a country’s stock market, such as materials, telco’s, financials etc. As a result, it is important to have a balanced portfolio.

Similarly, there are clusters of coins and currencies that serve different purposes.

Let's take a look at what I call the top 3 types of coins you can invest in.

Gateway coins

For example, there are the gateways coins. These coins, such as Bitcoin BTC, Litecoin LTC, or Bitcoin Cash BCH, are often used to help you to get into the digital currency space.

These coins are the holders of value and fundamentally built for transactional purposes. They’re like money.

Platform Coins

Next, you have the other sets of coins that represent the platforms where the functionality of the blockchain is accessed.

Let’s call them platform coins, such as Ethereum, which forms the basis for many coins within this sector. Lots of people have been and are currently investing in Ethereum as they build their portfolio of platform coins.

EOS is another, which is yet to hit the market but is likely to revolutionise the platform experience. There are others such as Cardano and NEO which act as the internet of the blockchain.

Initial Coin Offerings or what we call Functional Coins

Then, you have the Initial Coin Offerings (ICO’s) and the coins themselves. Let’s call this sector the functional coins.

Back to the stock market analogy, an ICO is like an Initial Public Offering (IPO), and the coins are like the individual stocks; the workhorses, the ideas, the functional part of the blockchain.

For many, these represent a growing portion of their cryptocurrency investment.

Please be aware that the market cap of many of these lesser-known ICOs is extremely small.

Some examples of these include coins like Presearch (PRE), which is a blockchain driven search engine. Or VeChain (VEN), which is a product identification management solution used to record the date of things like food and wine.

These are functional coins.

So, when looking to construct a portfolio of digital currencies and coins, we can allocate a percentage of capital to each of these sectors:

  • gateway coins;
  • platform coins; and
  • functional coins.

Competitive vs disruptive   

Within each of these categories, it is helpful to look at how these coins and their underlying technologies are solving problems in the world.

I like to draw the distinction that identifies whether the coin is bringing competitive pressure or a disruptive solution to market.

By competitive, I mean by using the blockchain to tackle problems that are already being solved by existing business structures.

A blockchain driven decentralised search engine

For example, Presearch is a search engine. It is bringing competitive pressure to an existing industry. It’s a blockchain driven decentralised search engines while Google is centralised, meaning a small group of people control it.

By disruptive, I mean using the blockchain to completely change the way an entire industry operates. 

For example, VeChain is using the blockchain to record use-by dates.

When produce is grown, what happens to that produce between being harvested and arriving on the supermarket shelf?

That's going to change the way that industry works in terms of freshness and contamination.

We now have sectors identified, but which cryptocurrencies do I put in my portfolio?

best cryptocurrency sector to invest in

If we can come back to the analogy of the investment strategies of the stock market when you look at how most indexes are constructed, they’re formed on the basis of market capitalizations.

If you've got a stock portfolio, you're going to have the large-cap stocks like the large banks, big tech, the large mining companies, and the large retailers taking up a large portion of your portfolio.

The same applies to putting together a portfolio in the cryptocurrency markets.

Starting with gateway coins, the large capitalisation (cap) coins such as Bitcoin through to Bitcoin cash and Litecoin would make up the lion’s share of this part of your portfolio.

From here you would add you platform coins, again from a market cap perspective, such as Ethereum down to EOS, Cardano and NEO.

Only a small portion of your portfolio should go to functional coins

Finally, you would look at the functional coins.

Within this part of your portfolio, it is harder to identify potential winners, so it makes sense to allocate a smaller amount of capital to this sector - perhaps 7 to10% of your portfolio.

Placing a small portion in the more speculative side of the crypto market is a great way to learn how to invest in a risk-averse fashion.

How to decide on which sectors of cryptocurrencies to invest in

Decisions on which coins to buy in this sector comes down to good research.

Focus on things that you are interested in and areas of business you understand or can relate to. If smart contracting is something which appeals to you and you know it well, then focus on that area.

If you're interested in a certain area of business, then look for coins that relate to that.

For example, it could be coins that provide credit card capabilities or coins that provide blockchain for rental properties or real estate.

best real estate cryptocurrencies to invest in

As you can appreciate, there is a lot of money in sectors like Real Estate, so you will find a number of innovative coins to consider in your portfolio.

There are hundreds of interesting opportunities for the application of blockchain technology and businesses with coins to invest in.

How do you manage the volatility of these smaller cap coins?

Having traded all types of markets over 30 years, sharp spikes in volatility is something I’m quite used to.

In my experience, it's always a good idea to leave a portion of your investment in the market in case you get these crazy spikes and volatility; then you can sell out some of your holdings.

By doing this, you can sometimes bring the underlying cost of the residual amount of coins that you keep to zero.

A buying and selling strategy to protect your profits

For example, if I bought 10,000 EOS at $0.50 and sold 5,000 of my holdings when it traded at $1.00, the average cost of my remaining 5,000 EOS is $0.00.

Then I can hold my remaining balance for as long as the market remains in an uptrend without having to worry about losing capital.

As we’ve seen over the last 6-12 months, when a functional coin becomes popular, it can have moves in percentage terms in the thousands quite quickly, so it’s always good to take some profit in the marketplace to take advantage of that volatility.

iota investment price gain percentage

For those who like to day trade instead of invest in bitcoins for the long-term, having a capital preservation and profit taking strategy is powerful.

How do you research so many coins?

There's a number of sites that will assess them for you. You don't have to watch the market day in and day out. Standard & Poor's or Moody’s are useful sites, they assess coins based on a particular methodology and set of criteria.

There's also a lot of coverage on YouTube. There are some very good crypto analysts on YouTube analysing Bitcoin and Ethereum, Ripple XRP and more.

As you can appreciate, it is just their opinion of a coin. We've put together a list of popular YouTube analysts at the bottom of this page.

Do you re-balance the weightings of different cryptocurrencies in your portfolio?

The larger coins, especially over the last 9 to 10 months, have stabilised. Bitcoin will drift roughly between 33% and 40% of the total value of the complete digital currency market, so it’s becoming more stable.

The ones you want to keep an eye on are the smaller coins. They're just so volatile that if you do get an opportunity to take a little bit of money off the table, it's probably a good idea to do so.

Taking profits on the smaller cryptocurrencies

You can either do that by leaving orders in your brokers, in your trading platforms or have an alert system whereby if it moves, you can capture some profits.

I keep an eye on coinmarketcap.com as a guide to what’s moving. If your coin starts to move, then you're going to need to pay extra attention to it.

For a broader portfolio rebalance, look to bring your sector weightings back to your target perhaps every six months, except for the smaller coins.

Keep a closer eye on the smaller coins as they can have short-lived spikes in value which can quickly distort the balance in your portfolio.

Where do you store your coins?

You need to know how to store cryptocurrencies for your own financial well being. As the value of cryptocurrencies fluctuates, you may find at different times that your total holdings have risen considerably.

For the larger coins like Bitcoin (the largest cryptocurrency), Ethereum ETH, Bitcoin Cash and Litecoin, it's probably best to keep those in a secure software or hardware wallet if you are not trading them aggressively.

It’s safer in a wallet than housing them on an exchange. The smaller coins I tend to keep in one or two exchanges.

I often use the Binance exchange and the Bitfinex exchange. I find these to be two of the best cryptocurrency exchanges. They have great accounting and portfolio management systems.

They'll revalue it in real time so you can always keep an eye on it in your exchange. That's what I tend to do with the smaller coins.

Where do you see digital currencies going over the next 12 to 24 months?

best cryptocurrency price projection

I see the price of Bitcoin stabilising. It had such a wild run from May 2017 to December of 2017. It was incredible.

Bitcoin ran to $20,000.

It wouldn't surprise me if we traded for another 12 months between $6,500 and $15,500.

Don't forget, we've got the large future exchanges involved now. The liquidity provided to the market by these exchanges has taken a lot of the volatility out of the market, and it will probably continue to do so for a while.

In a range, basically 6.5 to 14.5, maybe a top of15.5 thousand, but that reduction of volatility is probably a good thing for these markets over the long term. As you can see in the Bitcoin chart below, the average daily price movement in Bitcoin has been in excess of $2,000 per day and as of May 2018, it is moving around $450 per day.

best cryptocurrency bitcoin volatility chart

It will likely cause more people to use these currencies for transactional purposes over the internet rather than just for speculation.

The more people that get involved, the brighter the future for digital currencies in general.

List of ICO research and the best Bitcoin Youtube channels for research

Ivan on tech

Ivan Bitcoin YouTube channel

Boxmining - Daily news

Box Mining Bitcoin YouTube Channel

Daily crypto

Daily Crypto youTube news channel

ICO reviews

best micro cap crypto website

www.microcapcrypto.com 

ICO ratings

best ico rating crypto site

www.icorating.com

ICO ratings

best ICO tracker website

www.icotracker.net

Summing up the Best Cryptocurrency to invest in

Hopefully, you now have a solid portfolio construction plan on how to include the various cryptos to invest in.

There is no single best cryptocurrency to invest in, just like there is no best stock to invest in. Building a portfolio of cryptos, covering the gateway, platform and functional coins is a simple strategy to consider.




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Going through to checkout takes about 2 minutes. You won't find an easier process anywhere. Once you've placed your order, it can take between 10 and 60 minutes to receive your Bitcoin Gift Card depending on the speed of the Bitcoin network at time of purchase.

How our Flexi eGift Cards work

We have partnered with GiftPay, an aggregator of online deliverable eGift Cards in Australia.

Through our agreement with GiftPay, you are able to purchase a Flexi eGift Card from us, redeemable at a broad range of retailers in Australia.

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What is a Flexi eGift Card?

A Flexi eGift Card is an electronic gift card that lets you choose where you'd like to shop! In the past if you were given a gift card for a particular shop but didn't want to buy anything from that shop, you were stuck. But now with a Flexi eGift Card, you get to choose at which shop you spend your gift. 

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Where can I spend it?

You can spend your eGift Card at a broad range of Australian retailers. For a full list of our retailers, click here. (page showing full list of retailer logos)

How do I redeem it?

Your Flexi eGift Card will be emailed to you. Click the link in the email to open your Flexi eGift Card.

Then convert your Flexi eGift Card into any combination of gift cards or vouchers up to the total available balance. How you redeem your chosen gift card depends on the card or voucher chosen.

Pay a BPay Bill

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You can pay any bill that has the BPAY logo and Biller Code including credit cards.

Are there any payment limits?

Yes. You can pay a maximum of $1000 per transaction based on regulatory limits. You can however break up a bill into multiple $1000 tranches and enter the same biller and customer reference code.

How does the transaction work?

When you enter the amount you wish to pay, the BPAY biller code and your bill’s customer reference number, you will click through to our checkout.

At checkout, you will be asked to leave your details, which enables us to satisfy our legal requirements under the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017. This sounds ominous, but takes about 2 minutes.

When you proceed to payment, you will be shown the digital currency amount payable and the wallet address to send your digital currency to.

Once you have sent your digital currency to our payment gateway wallet, you will receive an email notifying you that your payment has been received. We then convert your digital currency to AUD and pay your BPAY bill on your behalf.

Are there any fees?

Yes. At checkout you will notice our 3% fee added to your bill amount. This is to help us manage the currency risk of a volatile digital currency market when converting to AUD for us to pay your bill. We use a third party payment gateway to enable the digital currency transaction. Our considerations when choosing a gateway was security, pricing (spread) and speed. You’ll note when at checkout (before proceeding to payment) that the price you receive on your digital currency is very competitive. Other digital currency BPAY facilitators charge up to 6% per transaction on the currency alone, which in our view is akin to highway robbery.

 

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