#AD
After a little analysis, we can name cryptocurrencies that can show growth, even in conditions of uncertainty.
This material is not a personal investment suggestion, and the financial instruments or transactions described may not be suitable for your portfolio and investment goals. The evaluation of a financial instrument or operation’s compliance with interests, as well as investment objectives, should also be added to the personal responsibility of each investor.
While the cryptocurrency market is in a state of uncertainty and at risk of a long slide, tokens with a long-term vision should be considered.
The best way to analyze such tokens is to start with their volatility and examine them in the context of other coins. To begin, such tokens are generally less correlated with broader market movements, and secondly, when the market is inactive for a long time, they can produce outstanding results.
The second approach is to divide the capital into two parts: DeFi investments and NFT+GameFi, which are separated. Additionally, owing to the high level of uncertainty in these areas, we recommend investing at least 20% of the portfolio in short positions to hedge risks. Here you should pay attention to the KuCoin trading bot.
Let’s start with the structure.
The first part of the portfolio will be dedicated to flagship initiatives in the area of decentralized finance:
- Polygon (MATIC) — 30% (in which numerous DeFi projects are building, the native token of the actively developing Ethereum side chain, in which many DeFi projects are established);
- Uniswap (UNI) — 25% (a cryptocurrency that is used on one of the largest DEX platforms);
- Polkadot (DOT) — 25% (also a token of one of the DEX platforms most actively developing the Web3 ecosystem);
In the case of 80% (20% less), it is preferable to open a short position on DeFi Pulse Index (DPI) (an index token that encompasses the entire DeFi ecosystem) or Ethereum (ETH).
The second component of the portfolio is geared toward funding projects that are linked to the hype surrounding the decentralized game and metaverse market:
- ApeCoin (APE) — 25% (The ecosystem of the most popular NFT collection is directly linked to the token, making it a very valuable addition for BAYC users.);
- The Sandbox (SAND) — 25% (A smart contract (the “game token”) created by the system for an ecosystem of a multi-user decentralized game with DeFi and NFT aspects);
- Axie Infinity (AXS) — 25% (A GameFi token is a unit that may be used in the GameFi ecosystem, which includes other types of tokens and decentralized apps.).
In order to balance the open bets, it’s essential to acquire no less significant projects from the same regions. That is, you need to hedge any open short bets on:
- Decentraland (MANA) — 15% (The meta token of the ecosystem of a multi-user decentralized game, the proprietor of the world’s biggest virtual environment, and intrinsically linked to metaverses);
- STEPN (GMT) — 10% (NFT token of a contemporary lifestyle game that is directly linked to NFT and play2earn mechanisms).
Main risks
The current phase of the market, in effect, does not favor short-term investments in the cryptocurrency market, and the chosen areas are most volatile during periods of high uncertainty. Because of all of this, it’s critical to offset the portfolio’s overall volatility thanks to short positions on related assets within niches. On one hand, this may reduce the potential return, but on the other hand, it will protect against market fluctuations.
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Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
Cryptocurrency trading involves high risk, and is not suitable for all investors. Before deciding to trade cryptocurrencies, tokens or any other digital asset you should carefully consider your investment objectives, level of experience, and risk appetite. TaxGuru does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions. By the use of the above information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof.
