Steemit Crypto Academy - Week 6 - Homework Post for @stream4u

Hello awesome people, how is everyone doing, hope everyone is doing great and having an awesome and splendid day. Super excited to be part of this amazing crypto lecture week and to partake in the courses. This is really amazing as it is a fabulous way to add value to the community and also gain knowledge as well. For me. I have learnt so much so far participating in these courses and I have to say, it has really helped improve my knowledge on topics on blockchain and crypto. This week’s topic covers types of crypto assets capital, risk capital in penny cryptocurrency, importance of watchlist…

Differences in Large Capital - Mid Capital - Small Capital and how they will affect to the Investment?

When it comes to investing in cryptocurrency or any other assets, large capital, mid capital and small capital are three of the terms that are very important to understand as far as investment is concerned. In cryptocurrency terms the market capitalization is basically the metric that measures the relative size of a cryptocurrency asset. The market capitalization of a cryptocurrency asset is gotten by multiplying the circulating supply of that particular cryptocurrency asset by the current price of the cryptocurrency asset.

Large Capital
Large capital in cryptocurrency is basically a top cryptocurrency asset with a high market capitalization. They are considered cryptocurrency assets with over 10 billion dollar in market capitalization. This capitalization type have a lot of exposure, attention and popularity due to the high market capitalization and as such gain a lot of visibility and attention. On platforms like coinmarketcap, cryptocurrencies are ranked based on market capitalization, from highest market cap to lowest market cap…

When it comes to investments, cryptocurrencies with high market capitalization tend to be the safest way to go because they have a lot of users and community behind them and also have a lot of exposure, attention and stability, making them safer to invest in. However, the ROI might be low on large market capital assets or might not yield high-profit margins, but are considered the safer options for stable profits and more secure investments.

Mid Capital
Mid capital in cryptocurrency is basically cryptocurrency assets with a mid market capitalization. Like the name mid capital, they are simply in between low cap and large cap. They are considered cryptocurrency assets between 1 billion dollar and 10 billion dollar in market capitalization. On coinmarketcap currently, mid capital cryptocurrencies occupy the 12-85 spots.

When it comes to investment, cryptocurrencies with mid capital are considered slightly risky but can yield bigger profit or have higher ROI compared to large capital assets. These assets still have room to grow into large cap in the future, making them good investment opportunity for high profits or ROI. While mid cap assets can yield high returns in the future, they are not as safe as large cap assets and can be more volatile in terms of the price of assets. Nonetheless, a good project that still falls under the mid capital will most likely be considered a good investment option for investors because of the potential profits or potential ROI.

Low Capital
Low capital in cryptocurrency is basically cryptocurrency asset with a low market capitalization. Like the name low capital, which means that are below mid cap. They are considered cryptocurrency assets with less than 1 billion dollar market capitalization.

When it comes to investment, cryptocurrencies with low capital are considered very risky but can yield very high profits or very high ROI simply because they have a long way to go to reach large market cap and as such can have a very high price increase. The volatility in this capital class is very high and not stable… the price of a low cap asset can drastically drop to almost nothing in no time. That is why they are usually very risky to invest in. Considering the very huge profit potential, a lot of investors like to take risks with low cap assets because when it pays off, the profit returns are usually incredibly high which sometimes makes is a worthy risky investment to make for experienced investors. There is a high risk of losing everything invested when it comes to low cap assets, that is why it is advised to be very careful and do a lot of research before delving into investing in low cap assets.

Which type of Asset capital can be more profitable? Why? Advantages and Disadvantages

In my opinion, when it comes to which asset capital can be more profitable then it has to be low capital assets because of the huge growth potential. Some low capital assets can do a 100x or 1000x in days, making them mouthwatering investment opportunities for experienced investors.

Advantages

1. Incredibly high-profit returns
2. Price can 50x, 100x or even more than 1000x in a matter of days
3. Does not require very large investment capital to gain massive profit returns
4. Great for short term investment
5. Great for quick profits

Disadvantages

1. Very risky investment
2. Price can drop to nothing in a very short time
3. Very volatile
4. Can lead to loss of investment capital
5. Easily manipulated in the market
6. Can easily be dumped

Thoughts on Risk Capital and Penny Cryptocurrency

Risk Capital
Risk capital is basically the funds or money set aside for risky investments or investments that are risky but with the potential of yielding very high ROI or very high-profit returns. These funds are most times used for speculative investments. This is what most people refer to funds that you can afford to lose when it comes to risky investments. Investors usually lookout for quality projects that are very undervalued and unproven yet and invest in them because they have the potential of yielding very high ROI.

Penny Cryptocurrency
Penny Cryptocurrency is basically cryptocurrency that are 1 cent or less than 1 cent. A lot of penny cryptocurrencies are usually undervalued, making them a mouthwatering target for risk capital investments. Depending on the market capitalization, a lot of the penny cryptocurrencies are either mid capitalization or low capitalization and have room for growth and high profits.

What is the Role of Watchlist?

A watchlist in cryptocurrency is basically cryptocurrency assets that are monitored for investment decisions. The role of a watchlist is mostly to monitor or keep a close eye on certain cryptocurrency assets that have been set aside or added to a watchlist so as to make better investment decisions. Some watchlist tools also provide the prices and charts of the watchlist cryptocurrency assets so as to help in monitoring the progress of the selected cryptocurrency assets for better investment decisions.

Best way to set Watchlist

There is no right or wrong way to set a watch list because it all boils down to your personal decisions when it comes to investments. However, in my opinion, the best way to set a watchlist in cryptocurrency is to pick very good cryptocurrencies like 3 or 5 from each of the market cap class. So in my opinion, it is best to select 3-5 cryptocurrency assets from large market capitalization, 3-5 from mid market capitalization and 3-5 from low market capitalization and monitor them closely for better investment decisions.

[My Watchlist on Coinmarketcap]

From my watchlist, you can see that I added 4 large market capital cryptocurrencies, 4 mid capital cryptocurrencies and 3 low capital cryptocurrencies. The reason for having only 3 low capital cryptocurrencies is because this is a very high-risk investments and as such, I prefer to have only selected few that I like.

Conclusion

In my opinion, having a sound knowledge of market capitalization is very good as far as cryptocurrency investments is concerned. No investment can be considered as right or wrong, what matters is making the right investment decision and choosing the right project to invest in, at the right time to make the best ROI. Understanding the various market capitalization is important to know the risk levels associated with large, mid and low capital cryptocurrencies. Knowing this helps to make better decisions when it comes to investing in any of the cryptocurrencies.

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@steemcurator01
@steemcurator02
@steemitblog
@stream4u