Developing your own Active Crypto Portfolio Index

in cryptocurrency •  last year

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

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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.

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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 :)

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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

This post received a 2% upvote from @randowhale thanks to @wingz! For more information, click here!

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.

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Haha, very cool site, I'l have a proper read through later. I like the hipster meme :P

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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.

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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 :)

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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?

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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.

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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?

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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.

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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!

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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

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Thanks. Glad you could learn something from it :)

Just what i needed thanks

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Glad you liked it

retracted

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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

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Great post! I will def try to use this when building a coin portfolio. I'm still pretty new with all the cryptocoins but I try to learn new things everyday. Thanks for the great read.

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Glad you enjoyed it. I'd advise doing lots of testing with cryptocompare and trading with very small size so you have enough time to get a feel for how the markets move.

Welcome to crypto :)

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Thanks for the advice. I have only traded (mostly invested for long term) on stock market before (Swedish). I will not go full investment on crypto since its so new for me and as you say I need to get a feel for how the market works. I will follow you for future posts, once again thanks for the great read.

Nice work, I like the idea of a dash board look to keep an eye on things. In my days of Investment banking, I new a guy who invested in many different biotech startups, knowing all along that 9 out of 10 would under perform, but he only needed 1 to soar in order to make a lot of money!

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Yeah it really helps reduce the mental workload having a few ideas and crypto portfolios all in one place. Allows you to have more of a chance of developing an edge - like your friend diversifying in biotech :)

I use Cryptocompare! I Love it

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An absolute lifesaver for me :)

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Me too. You see everything you have invested in real time, and very easy to navigate.

I'll be interested in hearing your fundamental analysis / value analysis thoughts. I think that (good) crypto has value-through-utility which when combined with the scarcity of the coin could be used to determine an underlying to price. But it's very difficult to get a robust analysis.

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Check out my last post, I go a little into value analysis and fundamentals. I think you're looking at the right 'filters' - just have to take that step into making your own tester portfolios to focus your attention on the right details.

I'll try to go into some more depth in the future.

Thanks

Thanks for Iconomi to my attention. I will definitely look into it. However, it sounds very similar to Prism from ShapeShift. It will be interesting to see how this dynamics of setting up your own ETF all plays out in the future.

Interesting things are happening with all these DRY code platforms.

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Prisim seems to be an interesting project, something about it feels a little overvalued to me though. Check out my last post on valuing crypto funds, there a little more to Iconomi than just an ETF like portfolio.

Very interesting time in crypto

Those are some good cryptos you have in your portfolio, and I would say 10 is a great number for diversification in cryptocurrency, as too many gives higher probability of losses (due to the crypto market cap ceiling and distribution of total market cap among currencies).

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Yeah, it's good for keeping track of things. I want to branch out a lot more in the future, hopefully keeping a similar methodology to manage even larger portfolios.

Thanks for your comment

You should take a look at the new Enigma platform created by some academics that apparently open-sources hedge-fund building tools for cryptocurrencies.

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I'll check it out. Cheers

thanks for the information of portfoilio

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Thanks

Undoubtedly brilliant.please promote me if possible

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Glad you enjoyed it. How do you mean?

looking forward to future updates <3

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Should be fun :D

Great post, I use Crypto Compare as well it's' a great website!

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Have you tried blockfolio too?

Working on my own portfolio as funds allow.

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Good luck

That is really cool!

I do it differently though. I have different coins on different exchanges and wallets and every month I put profits and losses to notepad. So I dont care about the little moves that happen every day, but about the whole picture of my investment.

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I think that's a good longer term strategy to have, disconnects you psychologically from day to day fluctuations. Certainly good in something like crypto recently anyway. How's it working out for you?

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Nice article there! Hopefully u can check it out article of current BTC facts.
@Styxer
Thanks!

Great post! Did you think about something like "Bitcoin resistance index"?Index of coins with low correlation with BTC price, which stay stable, while BTC remains volatile. I found two - they are Ripple (XRP) and Raiblocks (XRB), but looking for more coins with potential in this field.

Man, can you donate me 0.5 steem dollar?
As I wanted to invest in steem currency because I know it will definitely will rise in value.However, my dad was not allowing me to do that. Can you let to prove to my father that i am right? Thank you.

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