Post
Topic
Board Altcoin Discussion
Re: rpietila Altcoin Observer
by
Peter R
on 11/07/2014, 03:14:25 UTC
Ok, I gotta say...

Reading this thread has significantly changed my perspective on altcoins in general.

Then this thread is working.  I second everything Melbustus just said.  

Regarding how you should allocate your crypto portfolio, the first thing is to understand what the neutral crypto portfolio allocation is.  According to Coinmarketcap.com:

   bitcoin market cap         = $8.033 billion
   total crypto market cap  =  $8.571 billion

Bitcoin represents 94% of the crypto market cap.  So, if you think bitcoin will appreciate at a faster rate on average than alt-coins in aggregate, then you should allocate less than 6% of your crypto portfolio to the alts.  If you think alt-coins will eat into bitcoin's % market share, then you should allocate more than 6%.  If you think you can pick a winning coin, then of the % you have decided to allocate to alts, you should invest more heavily in those you think will be "winners."

Consider Crypto Investor X.  He thinks bitcoin will tend to grow faster than alt-coins due to the network effect, but he also thinks there may be a small niche market for a crytpo coin with strong privacy protection that might displace Litecoin.  Because he believes in the importance of the bitcoin network effect, he should probably invest less than 6% in alts (let's say he chooses 3%).  He would then allocate this 3% between the alt-coins showing promise in the area he is interested in (strong privacy), trying to invest more heavily in those he believes to be the most legitimate.