Developing your own Active Crypto Portfolio Index
When I first heard about Iconomi's idea to create a portfolio, ICNX -an ETF tracking a basket of cryptos, I was excited.
This was it! A great way to get diverse exposure to crypto as a whole. They would balance it and I could sit back and for a relatively small fee.. have a fully diversified portfolio.
However as a trader and investor, I thought I could do better, so recently I've taken the steps to develop my own portfolio based on the top 30 crypto's and the ICNX ETF.
What if I could combine a little technical analysis to time the entries better?
What if I could throw in some fundamental analysis to hold onto winners longer instead of 'rebalancing' them based on arbitrary % criteria?
What if I could throw in a little Warren Buffet style value analysis?
So I began my journey...
This is largely an exercise in filtering. I have a basket of coins to look at with a few rules to seperate the wheat from the chaff.
Let's take it from the top, I'm looking at the top 30 market cap crypto's and the ICNX selection.
Out of these I need to filter down, I'm looking for trends and coins that are 'relatively' undervalued. The first thing I'll look at is the context of the market, browsing through each chart. Is it trending, ranging or reversing?
The initial browse begins...
I had a look at the charts of my potential basket of coins. I picked the ones that had the context of a trending market and discarded the rest. I decided to limit the investments to 10.
Here's what I came up with...
This was a very quick, largely technical analysis. I threw a couple other coins in there as I had been looking at them for a while but it was mainly just the story the charts told.
I put in a hypothetical 1 BTC into 10 coins back on the 23rd April. The website I'm using is Crypto Compare.
A very useful feature in Crypto Compare is the ability to create multiple, real-time updated portfolios, along with a whole raft of simple analytical tools.
Performance in BTC
We're looking at one of the most insane rallies in crypto in this time period. So it should be taken with a pinch of salt. It's all about your initial basket of crypto you look at and how you filter them down. Also this is a relatively crude method to develop a crypto-folio. Does anyone use a similar approach?
There are many approaches to filtering, you can have a good grasp of the fundamentals of the coin, you can trade the relative Net Asset Value of a basket of coins that hold ETH and may lag the recent bullish ETH moves.
Conclusion
This is a basic example of a first step anyone can take to develop their own portfolios and keep on top of things, in the future I'll go into more detail with other filtering techniques and methods that I use to actively manage my risk and exposure to the crypto markets.
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Images from Pixabay and Cryptocompare
Bravo, an excellent how to post. Crypto compare is a very useful website. Wish I had this basic info when I first got involved in cryptocurrencies.
You should check out Cointracking Portfolio Manager.
It has
For details of how to use these features checkout this post.
Thank you!
I've created my own portfolio myself! I didn't make it complicated though. I'm just using the coins that exist in the Exodus wallet and balance them so that about the same amount of dollars is put in the coins. If there was some kind of portfolio-maker i would use it right away :)
Definitely a good strategy given the current markets for exposure. Could get a little messy in a bear market though, I'm trying to develop a few hedging strategies for when BTC gets hit. I haven't been too aggressive in rebalancing just yet. I'll take at look at the exodus wallet and see if following it for a month uncovers any hidden gems.
Thanks
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Did my own for my site - http://metacoin.co - and it's called the "BRED Portfolio" - Bitcoin, Ripple, Ethereum, and Dash.
It's up - on a hypothetical basis, of course - 2340% YTD.
Haha, very cool site, I'l have a proper read through later. I like the hipster meme :P
Thanks, mate. Yeah, we like hipsters. Hipsters like bitcoin, right?
"So it should be taken with a pinch of salt."
This is an understatement right? Trying to apply past performance to future results is always bad, and in this case, it seems to be completely absurd. You can't use the last few months as a guide for anything!!
Or am I wrong?
Either way - as I prepare to begin my own cryptocurrency portfolio, this kind of content is super useful. Thank you for sharing! I suspect that my own portfolio will look pretty similar to your top ten.
Yes it probably is an understatement - crypto markets are completely insane.
I'm not recommending jumping into the above portfolio. Just the methodology of having a list of crypto that you look at and filtering them based on certain criteria.
If you look at crypto from a value perspective, buying when they dip below NAV (for funds - check my last post with Taas) and selling when they push above, then certainly past performance of the 'individual' making those decisions can correlate to future performance.
Also markets have inertia, they like to keep doing what they've been doing, that where all the sayings like 'the trend is you friend, until it ends' come from.
Ultimately when taking an approach like this you get to see patterns you might have overlooked.
You start to ask yourself questions - which coins are moving faster? Why is this coin lagging behind? What news is out?
Thanks for the comment :)
Ah, this is brilliant! I get you now.
If I understand you correctly - your goal is to measure how effective your process of picking a portfolio is - not to measure the actual performance of the coins. If you can repeatedly do a good job of researching and deciding, the actual performance is likely to work out in the long run.
Is that right?
Yep. Exactly that!
Focus on the process and not the outcome - then once you've developed a skillset the performance will come.
:D
Have to giggle from the irony that steem didn't make the list of the top 10. ;-)
Thanks for the crypto compare link. Was not aware of the site, this will be very useful in my portfolio trading.
I've been doing something similiar, building a basket of cryptos, buying on the dips of the trending coins.
haha, well at that point Steem was technically looking like a potential reversal, not in trending mode. I thought the probability was lower, around 40% of it pushing up. It did, and like most lower probability setups the potential profits were huge from that point :)
Wouldn't it be worthwhile to put a small percentage in a potential high riser from the #60-120 market cap range?
Certainly, but then you'd have to look through and search through all of those coins, based on probably different criteria. You couldn't just pick one, you'd have to pick a few and diversify to build a proper, probably independent portfolio.
Which means a lot more work.
Otherwise you're just taking a punt.
It's something I'll transition to, but then it becomes a full time job.
Yeah, it's a lot of work, that's for sure.
Or you could just pick one with nice animations on the web page... not because that says anything about the project, but because that seems to be what triggers other people to invest... Just kidding!
You're right to a certain extent. I like to call them 'Shitcoin Heuristics' - developed over many years of being a shitcoin master... A certain set of skills...
I don't have these skills :(
great insight on how to work on ur portfolio...am new on all these but with such posts, i have the necessary tool to start working on my own...seems steem is a good platform to learn good stuffs . my first day in steem and am already learning things...keep it up
Thanks. Glad you could learn something from it :)
Just what i needed thanks
Glad you liked it
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Sounds interesting. I don't really use much technical analysis. I mainly just look at naked charts.
Thanks for the recommendation though
Yessir