Crypto Academy Season 3 | Intermediate course homework task for professor [ @allbert] : DCA to create a Portfolio
Select two Crypto, perform fundamental analysis, and based on your fundamental analysis explain why you chose them. Exclude BTC, ETH, RUNE. Develop and justify your answer. Be original.
For this task I'll try to do fundamental analysis or BNB and XRP.
Binance Coin (BNB)
Binance coin (BNB) was launched in July 2017 , approximately 4 years from now. We know that binance coin is the native cryptocurrency of binance blockchain but it was launched on Etherium blockchain with ERC 20 standards. Binance has undoubtedly succeeded in achieving good height , all this does not come out of blue , but can be understood from the time of of ICOs of Binance by knowing that, one-third of the funds raised by Binance during ICOs were solely used for upgradation and developing the integrity of the Binance platform . So by being destined from the genesis to achieve new heights , they kept bringing progressive changes.
Utility of BNB.
Every aspect of fundamental analysis of binance coin will show some progressive change as for utility of the binance coin is concerned . It was launched about four years ago as a utility token to discount trading fee but it didn't stuck there. It kept diversifying its usage, so as to be adopted by masses. It is now being used for day to day activities like booking travel tickets and accommodation , gifts to your nears and dears, taking loans and other online services like bittorrent, VISA etc. Of these utilities, i would specially like to mention about UPHIVE. Uphive is video streaming platform of our continent with a very good repo and user base. This platform uses BNB to distribute gifts to its fanbase which account for more than 20 million users. This depicticts one perspective of BNB popularity.
BNB market parameters.
src
We can see that the fundamentals of BNB in terms of market parameters are rock solid.
Current rank of 4 and
Market Cap
$46,589,612,196
Fully Diluted Market Cap
$51,781,961,204
Volume 24h
$1,479,634,472
Volume / Market Cap
0.03174
Circulating Supply
153,432,897.00 BNB
Max Supply
170,532,785
Total Supply
169,432,897
With such strong parameters, anybody would like to invest or trade with BNB. These parameter clearly depict that coin has well established roots in Cryptosphere and is theredore trusted by so mamy investors/ traders across the globe.
Social outreach
The native platform of BNB coin, Binance has diverse social media fanbase with about 4.5M followers on Twitter and the community is socially active, updating its followers from time to time about developments taking place within the platform on Twittee amd other social media platforms like Reddit etc.
Team of supporters
Binance is backed by team of professionals with great expertise. Talking about all of them is not possible but let me mention about founder/CEO of binance that is Changpeng Zhao CZ) . CZ has bagged some great achievements like earlier CTO of OKCoin. He has also developed blockchain explorer named blockchain.info. Other team members like CGO
Ted Lin , director Benjamin Rameau etc are all experienced personalities, the efforts of these people are reflected by the success of BNB coin as well exchange.
RIPPLE (XRP)
XRP or Ripple is a cryptocurrency based on Ripple prococol consensus algorithms unlike Bitcoin and Ethereum that use POW. Transections are processed by trusted group of validators before recording on XRP Ledger. This sort of consensus mechanism is called Ripple Protocal Concensus algorithm. It offers many advantages over BTC.
Scalability
To establish its importance let me compare its scalability with BTC . XRP ledger can handle about 1500 transections per second while that of BTC can handle about 2- 5 transections per second. It means that XRP is 600 times faster than BTC. Average transection speed of XRP is 3 sec where that of BTC is 10 seconds.
XRP utility
Since its launch in 2012 , by founders
Chris Larsen and Jed McCaleb , XRP has been able to stand out of crowd due to its versatility. XRP transection fee is much lesser than BTC when both are measured in terms of same crypto or fiat. Ripple has gained popularity in the field of cross border transactions by setting a real world example in the form of Ripplenet. It is being widely adopted by traditional banking systems for multiple purposes.
Mining mechanism
Total supply of BTC caps only at 21 million while that of XRP is 100 billion. There is no mining mechanism of XRP, so the process of release of XRP is different from that of BTC. Ripple has pre-mined pool of assets and are released in a controlled manner for diatribution from escrow account. XRP ledger is more eco- friendly than BTC because energy expenditure in bitcoin mining is huge as BTC engages heavy hardware machinery like GPUs , ASIC etc. Carbon emission from BTC mining hardware has also caught attention of environmentalists.
Market parametes
With its current rank of 6 , XRP has solid market parameters like
Src
Trading Volume
24h
$1,906,588,748.26
Market Dominance 2.12%
Market Cap $27,788,024,256.55
2.79%
Total Supply 99,990,343,580 XRP
Max Supply 100,000,000,000 XRP
With solid parameters, anyone would like to trust upon it. These figures clearly reflect the trust of people that they pose on XRP.
Social outreach
xRP community is also socially active but comparatively lesser than BNB. It has fanbase of 1.9M on Twitter. But that doesn't lower its credibility . Social media community of XRP is also updating users about developments from time to time.
XRP support.
The credibility of XRP is being increased by professional team backing XRP and also by its availability for trading on leading global exchanges like Binamce , Bittrex, Swapzone alongside diverse utility.
Through your verified Exchange account (screenshot needed), make a real purchase of one of the cryptocurrencies selected in the first assignment and explain the process. The minimum investment must be 5USD (mandatory) and must present screenshots of the verified account and the whole operation.
I'll be doing this task via my Binamce account, let's begin by sharing my verified account screenshot.
Now I'll be doing purchas of BNB from USDT from Binance app. Open the app and main interface of app will be like.
Click on Markets from the bottom panel amd next page will be loaded which will show different crypto pairs and different markets available. We will select Spot trade and search for one crypto of the pair that we wish to trade. Suppose i wish to purchase BNB from USDT , I'll enter USDT and than look for trading pair USDT/BNB.
l
Click on target trading pair and the next page will be loaded showing details of the pair and Buy/Sell option.
Next we need to fill details of amount of trading pair. I choose 100% USDT that i had and that amounts to about 10.95 USDT for which i got 0.0341 BNB. Click on Buy BNB.
Binance has good liquidity for the selected trading pair, so order was executed spontaneously. So i couldn't take screenshot when order was awaiting execution. But I'll share details of same from my transaction history. Look at screenshot below.
Filled order from spot order history.
Finally, make a simulated exercise, using the DCA method to perform the purchase of two assets and present charts showing the data of days in which the operation was performed, price of purchases, average price, sell point, percentage of profit or loss. (include screenshots)
To understand the concept of DCA, I will take two case scenario for each crypto . So let me start from XRP/USDT chart of last 5 momths :
Case 1 : Lumpsum investment.
Lumpsum investment refers to investment at one time. Suppose i did lumpsum investment of 10000 USDT on ist may in XRP. From chart above, we can see that price of XRP on ist may was 1. 5757 USDT. So i would get 6346 XRP for 10K USDT. I planned to hold my investment till date and today on 16 july i planned to sell my investment. So sell point will be the end point of the graph. Price of XRP today at the time of writing this task is 0.60$ today ( USDT:USD 1:1) , as 1XRP = 0.60USDT.
So 6346 XRP would be be sold for 3806 USDT. So i lost about (10000-3806) 6194 USDT as i had invested 10000 USDT on May ist.
Case 2: DCA investment .
Suppose I am doing DCA investment of 2000 USDT per month, starting from 1st March to ist July, accounting for a total of 10000 USDT, that is, same as that of above.
Look at above graph for different prices of XRP on ist of every month as shown by horizontal lines.
MARCH
Price of XRP = 0.3996 USDT
No of XRP purchased in 2000 USDT = 2000/0.3996 = 5005 XRP ( approximately )
APRIL
Price of XRP = 0.5574
No of XRP purchased in 2000 USDT = 2000/0.5574 = 3588
MAY
Price of XRP = 1.5747
No of XRP purchased in 2000 USDT =1269
JUNE
Price of XRP =0.9930
No of XRP purchases in 2000 USDT =2000/0.9930 = 2014
JULY
Price of XRP = 0.6209
No of XRP purchased in 2000 USDT is 2000/0.62= 3221
Suppose we are planning to sell all our XRPs today on 17 july. Let's see the results
Tot number of XRP that we have today (all XRPs together) = 15097
Price of XRP today = 0.60 USDT
Toral USDT we will get = 15097 x 0.60 = 9058
Total Loss in this case = 42 USDT
Summary.
Loss in case 1 = 6194 USDT
Loss in Case 2 = 42 USDT .
Loss in case 2 (DCA) is 147 times lesser than case 1 (Lumpsum) .
Example 2nd : BNB/USDT
Case 1 : Lumpsum investment.
Lumpsum investment refers to investment at one go. Suppose i did lumpsum investment of 10000 USDT on ist May in BNB. From chart above, we can see that price of BNB on ist May was 514 (approx) USDT. So i would get 19.45 BNB for 10K USDT. I planned to hold my investment till date and today on 16 july i planned to sell my investment. Price of BNB today at the time of writing this task is 306$ today ( USDT:USD 1:1) , as 1BNB = 306USDT.
So 19.45 BNB would be sold for 5952 USDT.
So i lost about 4048 USDT as i had invested 10K USDT on May ist
Case 2: DCA investment .
Suppose I am doing DCA investment of 2000 USDT per month, starting from 1st March to ist July, accounting for a total of 10000 USDT, that is, same as that of above.
MARCH
Price of BNB = 260 USDT
No of BNB purchased in 2000 USDT = 2000/260 = 7.6 BNB ( approximately )
APRIL
Price of BNB = 291USDT
No of BNB purchases in 2000 USDT = 2000/291= 6.8 BNB
MAY
Price of BNB = 592 USDT
No of BNB purchased in 2000/592 =3.37 BNB
JUNE
Price of BNB =306 USDT
No of BNB purchased in 2000 USDT =2000/306= 6.5 BNB
JULY
Price of BNB = 299 USDT
No of BNB purchased in 2000 USDT = 2000/299= 10.03 BNB
Suppose we are planning to sell all our BNBs today on 17 july. So our selling point will be the end point of graph as calculations are being dome with respect to that. Let's see the results
Total number of BNB that we have today = 34.30
Price of BNB today = 306 USDT
Toral USDT we will get = 34.30 x 306 = 10495
Gain worth = 495 USDT
Summary.
Loss in case 1 = 4048 USDT
In Case 2 Gain worth = 495 USDT .
So with the same capital in DCA, we had gain of 495 USDT on following DCA strategy.
Concluding Remarks .
DCA in case of XRP prevented loss by about 147 times and in case of BNB, DCA yielded a profit of 495 USDT as compared ro lumpsum investment with the capital investment remaining constant in both the cases.
Hello, @ Thank you for participating in Steemit Crypto Academy season 3 week 3.
Actually i think Q was not demanding extra, it was a sort of , demonstrating understanding.
I mentioned that sell point is at the end point of graph and yeah it is not Labeled.
Actually amount is mentioned but not percentage.
I don't think so, coming up with exit scenario would have diluted the understanding of strategy. I have deliberately done it that way.
Thank you very much.