Hello Steemians, I welcome you all to week 11 in the Steemit Crypto Academy. Today's lesson was delivered by professor @yohan2on on Designing a Cryptocurrency Portfolio Management. I'm here to present my homework task in this post.
Crypto Investment Portfolio
We know the importance of diversifying our capital into different assets to minimise potential and make profits. We all know the highly volatile nature of cryptocurrency that can make an asset lose or gain 20% value in few hours, diversifying our assets into different cryptocurrencies will help to minimise risk and make returns on those assets that can make flash move within a short period. All the cryptocurrencies don't make the same changes at the same time, so a well-designed cryptocurrency portfolio will be able to capture the assets that perform very well and can also cover the losses in the other assets.
We are required to design a cryptocurrency portfolio management. Due to the short time frame given to create the portfolio, my analysis for selecting these coins will be based on technical and fundamental analysis. Below is the list of coins I have invested in and I will state my reasons for investing in these coins:
- Ripple (XRP)
- DogeCoin (DOGE)
- REEF Finance (FINANCE)
- Holo (Hot)
- Steem (STEEM)
Despite the ongoing SEC lawsuit against XRP which might affect its price, I still believe that XRP has its potential of continuing the bullish rally. Another factor is the Fed interest rate decision on cryptocurrency. But despite all this weak fundamental news hovering around XRP, my decision to invest in this coin is based on the technical analysis I have carried out. Yes, fundamental analysis greatly affects cryptocurrencies but I believe every price movements of an asset is being reflected on the chart that's why I always base my analysis majorly on technical analysis to get the best entry.
From the chart of XRP/USD shown above, we can see the price break out of a descending channel at $1.20 after trading in the channel since the 18th of April. This break out of descending Channel shows a bullish movement in the price of the asset and notice price have started going up after the breakout. Similarly, the price has crossed the 200 moving average and is now trading above it. When price is trading below the 200 days moving average, we are considered to be in a downtrend and when it is trading about it, we are considered to be in an uptrend. So this 200MA cross is an indication that we are about to go bullish. Currently, the price is ranging on a support level at $1.34 and this is where I invested in XRP. I'm expecting the support to be respected for price to retest a resistance level at $1.75.
The recent developments about Dogecoin are all about fundamental and sentimental analysis. Dogecoin has the backup of Elon Musk and has promised to adopt Dogecoin in Tesla. When this happens. His tweet alone about Dogecoin creates volatility in the price of the cryptocurrency. I invested in this coin based on fundamental and sentimental analysis. Elon Musk tweeted about Dogecoin yesterday which spike the price to 20% and we will see this price continue to soar up after 8th May as proposed by Elon Musk.
Similarly, other celebrities like Mark Cuban the owner of the Dallas basketball team have been talking about Dogecoin too and we will see its potential as more companies and investors adopt Dogecoin.
But from the technical analysis of Dogecoin, as shown below, we see price respecting the trendline which shows that we are in an uptrend. Similarly, the price has broken a resistance level at $0.29 and is now trading above 200 days Moving average. This is a sign of buying pressure on Dogecoin and we will see the price hit the next resistance at $0.42 in a short time. Dogecoin is a long term investment and the price will continue pumping as long as it has the support and adoption of major firms.
Reef is DeFi platform built on the PolkaDot network to facilitate cross-chain trading among Dapps. Reef has lots of potentials and the project is built to cover the pitfalls encountered in Ethereum DeFi projects which include low transaction fees, liquidity issues and the ability to access DeFi services without having multiple accounts. Reef is still a new project that is less than and has already gained the attention of investors. The team is working in line with the roadmap of the project. Reef just announced a partnership with Aavegotchi which is one of the creative projects in NFT space. Similarly, Reef Chain Mainnet will be launched next month, the first-ever blockchain built specifically for Dapps. These recent developments will a bullish trend in the price of REEF.
Looking at the technical analysis of REEF, we can see the chart patterns as the price is changing direction to the upside. We have three confluence's that shows that there is a bullish pressure. Firstly, we have a broken resistance turned support and price have rejected this support level to continue going up to the next resistance at $0.038. Similarly, we can see a cross in 200 moving average as price is now trading above it. This is also a signal that there's a bullish pressure. Furthermore, I will expect to continue the bullish move to the next resistance at $0.49 in a short. REEF is considered a long term investment and the project is still at a development stage. I will continue holding REEF until the completion of its roadmap.
In the last 12 months, BTT has grown over 2000% and still has the potential of price going higher. BTT is a peer-to-peer network that provides file-sharing services to users. The adoption of BTT by Tron is a good development for the project and this has helped to improve the ecosystem of the services provided by BitTorrent.
From the technical perspective of BTT/USD, we have a chart pattern indicating a bullish rally. Price is currently ranging in an ascending channel and we hope to see a breakout of the resistance for the price to retest the all-time high at $0.0130. Similarly, price is currently trying to break the 200-day moving average. From all indication in the technical analysis, we expect a bullish rally in the price of BTT. However, this bullish rally will happen faster on any recent developments in the project based on fundamentals.
HOT has shown an ROI of +2064% and the price have continued to surge further after they recently announced that it was granted a US patent for its ecosystem which is a big development for the peer to peer web platform. I invested in this project based on the technical analysis and price action.
From the chart above, HOT was in a downtrend after hitting an all-time high at $0.03. This downtrend was accompanied by a lower high and lower low formation pattern until a double bottom was formed as shown in the chart. The double bottom formation is a price reversal pattern which shows that price is about to reverse to the upside. Similarly, we can see a break of resistance in price at $0.0144 which was retested to form a support. From my prediction, the price is indicating a bullish pressure which might surge the price to the next resistance level at $0.021.
My prediction in Steem is based on technical analysis. From Steem.USD chart below, we can see a correction after Steem hit a high at $1.43. Price came down to retest the support at $0.8635. The support was broken which made the price of Steem touch $0.55 of the news on cryptocurrency taxation by Joe Biden. Since then, the price went back up break the resistance level. From my analysis, I'm expecting the price to continue the bullish move at least to the high @ $ 1.43. Steem is a long term investment and the price will continue surging up as long as there is liquidity and more people get to join Steemit.
My prediction on the price of these cryptocurrencies is majorly based on technical and fundamental analysis. Let's see the outcome of the investment in two days.
Use a Crypto wallet of your choice to hold your 6 cryptocurrencies.
I invested $70 in these cryptocurrencies. I bought them using BUSD on Binance exchange and the coins are still held in Binance exchange wallet as shown in the picture below.
Allocation of funds
|Cryptocurrency||Amount invested||Quantity purchased|
|Total amount invested||$70|
Evidence of the investment can be shown below. The execution order time of these investments are properly shown and the amount invested in each of them.
These investments will be tracked and monitored using profitTrading for Binance. I have important my and designed my investments in this wallet by connecting my Binance exchange wallet using the API key. The picture below shows my portfolio successfully designed in ProfitTrading for Binance.
Wait for a day or 2days, then showcase the final results of your investment portfolio.
Two days ago, I invested $70 into 6 different cryptocurrencies. My portfolio was designed using ProfitTrading for Binance. After two days, I was able to make $1.44 which is 2.05% of my initial investment.
I invested $20 in STEEM and after two days, I made a loss of $0.24 which is -1.2% of the total amount I invested in STEEM. From my analysis, STEEM is still bullish and I look forward to continuing holding the pair.
Amount invested: $20
Profit made: $-0.24 at -1.2%
$10 was invested in XRP and at the end of two days, I made a profit of $1.37 at 13.7%. I'm still holding XRP for a long because the coin has greater potential.
Amount invested: $10
Profit made: $1.37 at 13.7%
I invested $10 into REEF and held for two days. A profit of $0.77 was realized at 7.7%. REEF is still at its development and the maninnet DeFi platform will be launched next month. It's no doubt that I will still hold REEF for a very long time.
Amount invested: $10
Profit made: $0.77 at 7.7%
Similarly, $10 was invested in HOT and at the end of 2 days, I made a profit of $0.09 at 0.9%. From my previous analysis on HOT, the coin still has great potential for a bullish rally and the technical analysis is still not violated.
Amount invested: $10
Profit made: $0.09 at 0.9%
I also invested $10 into BTT and held for 2 days. I made a loss of $0.05 at 0.5% of the amount invested in it. We all know the potential BitTorrent has and the asset is currently undervalued. I look forward to holding BTT for a while.
Amount invested: $10
Profit made: $-0.05 at -0.5%
$10 was invested into DogeCoin and after 2days, I made a loss of $0.53 at 5.3% of the amount invested. DOGE has high volatility at the moment, but the coin still has great potential of going to the upside.
Amount invested :$10
Profit made: $-0.53 at -5.3%.
Use screenshot before and after to show explain whether there is a profit or loss in the investment portfolios. Which of the cryptocurrencies grow or loss and calculate the percentage growth of those cryptocurrencies?
Overall Stats of my Investment
|Cryptocurrency||Amount invested||profit made||%profit|
Graphical presentation of portfolio
From my investment of $70 which I held for two days. I was able to make a profit of $1.44 which is 2.05% of the invested amount. XRP gave me the highest profit of $1.33 while DOGE gave me the highest loss of $-0.53. Though these currencies still have the potential to increase in price, I still wish to hold them for a long time.
Amount invested: $70
Amount after 2 days: $71.44
Profit made: $1.44 Percentage profit: 2.05%
In conclusion, cryptocurrency investment is a game of patience and uncertainties. Similarly, it is a risky investment due to the highly volatile nature of the market. For this reason, a good portfolio will help you maximise profits and minimise potential risks. Diversifying your assets into different coins gives you an edge to cover up losses from assets that performed poorly. For example in my investment portfolio, the 6 assets I invested in did not have the same performance, but I was able to capitalise on the ones that did well and cover up losses on others that performed poorly. This is the benefit and importance of diversifying your investment into different assets.
Note: All pictures used in this post are screenshots taken from my wallet and Tradingview account unless stated otherwise.
Thank you Professor @yohan2on for this wonderful lesson.