Steemit Crypto Academy | Homework Task 6 For @stream4u; Different crypto capitals, Risk assets and penny cryptos.
My submission for week 6 homework task set ny @stream4u , which is about different categories of capitals.
Differences in Large Capital - Mid Capital - Small Capital and how they will affect to the Investment?
The differences in different capitals have been very well explained by our professor @stream4u and I'll try to tabulate the differences below :
| Feature | Large cap | Medium cap | Small cap |
|---|---|---|---|
| Market cap ($) | > 10 billion | 1 ro 10 billion | < 1 billion |
| Volatility | Least | More | Most |
| Growth potential | Lower | High | Higher |
| Repo | Top 10 | Top 10 - 50 | Below 50 |
| Short term growth | Less | High | Highesr |
Affect on investment.
When we want to study effect of different capital assets/companies on investment, we will have to look at two broader perspectives:
Risk involved in investment.
Profit accrued out of investment.
As for investment in large capital assets is concerned, they being less volatile are less risky and less short term gains are expected. To accrue benefit out of large capital investments, one may have to keep holding assets for years.
Medium cap assets are more volatile on one hand while on other hand they are more profitable too.
As for volatility is concerned, small cap assets are highly volatile, therefore risks involved are higher too. But most of the times loss is manageable as these losses do not amount for huge sums. These assets have potential of imparting huge profits too over long time periods.
Your view, Which type of Asset capital can be more profitable? Why? Advantages and Disadvantages. (Explain only 1)
According to my view, large cap assets are more profitable because of reasons mentioned in advantages below ;
Advantages of Large Cap Assets
Large cap assets are well established, have good repo and huge liquidity. These assets are less volatile due to huge following market cap that does not allow wild swings in either direction. Example, Bitcoin is leader of crypto market and imagine someone holding Bitcoin from 5 years and compare the profit.
Large cap assets are more transparent. As we are more concerned about crypto assets, it holds true for them too. Example, Bitcoin being a blockchain based cryptocoin is famous for its transparency. Every transaction of Bitcoin after verification is recorded on blockchain accessible to everyone and anytime. The other cryptocoins that have been launched later on, have all followed Bitcoin model.
Large cap assets/ companies act as role model for medium and small cap assets. They pve a way for development of new counterparts as has been seen by the numerous cryptocoins entering cryptosphere after Bitcoin.
Large cap assets offers advantage for its successors in terms of rectifying flaws that exist (if any) . Price volatility of Bitcoin and Altcoins have given rise to stable coins.
Disadvantages of Large Cap Assets
Large cap assets have slow and lesser growth potential. Therefore they are undoubtedly profitable but over long term. So these assets are not ideal for people looking for short term and rapid profit.
As no asset is immune to loss. Loss suffered in large cap assets therefore is also more compared to medium and small cap assets.
Thoughts on Risk Capital and Penny Cryptocurrency.
Risk capital as the name implies, refers to amount of capital that you are able to put in risk of losing without adverse consequences.
Penny cryptocurreny refers to ceyproassets that cost only pennies, may be less than 1$. Lower cost may be due to their new lumch (newly minted) in market or may have been in market but are not able to push their price up (stagnant cryptos) , may have experienced fall in price (fallen cryptos) or may be due to plenty of supply (plentiful cryptos).
I think it is good to invest risk capital in penny cryptocurrency. As penny cryptos have potential to grow therefore they can give huge benefit. Even if penny cryptos do not benefit you, as you are only investing risk capital, it is not going to effect you adversely. So such calculated risk should be taken for the purpose of greater benefits.
What is the Role of Watchlist? Best way to set Watchlist. Additionally, For Example, show your watchlist if you have configured it and give a short description of it.
Watchlist is one's personalized list of cryptos. It may contain large cap, medium cap and small cap cryptos in varying numbers.
Watchlist is meant to sort out interested cryptos from diverse list of cryptocurrencies existing in cryptosphere. By selecting cryptos, that you have invested or you are planning to invest and creating their watchlist , we get a chance to check for different parameters related to those cryptos at one click.
Best way to set watchlist is to make a thorough research about the cryptocoins before investing and invest in those only which have great future prospects.
watchlist from my trading view app
The cryptos that you can see above in my warchlist are configured based on my linkage to these cryptos.
Among the large cap assets there are BTC and XRP, i am using both of them for trading purposes. So they are there for easy and frequent navigation.
Among medium cap, there are BNB and LTC, i am also using these assets mostly for exchange purposes like BNB on binance and tracking LTC for future investment.
The small cap cryptos like BTT and XRP are there as i have invested in them and they are at track list to look for their long term price fluctuations, if any.
Conclusion.
Large cap, medium cap and small cap assets/companies are named based on their market capitalisation . Large cap assets are well established , have good repo and lead the market. Medium and small cap assets have potential of more rapid growth but are more volatile. In addition, there are also penny cryptocurrencies that cost low and have potential of swinging in either direction. Risk capital investment in penny cryptos can be made with the hope of long term gains.
Thanks
Twitter shared
Hi @drqamu
Thank you for joining Steemit Crypto Academy and participated in the Homework Task 6.
Verification for your Homework task 6 has been done by @Stream4u.
Thank You.
@stream4u
Crypto Professors : Steemit Crypto Academy
https://twitter.com/Qamran7007/status/1371431207381004294?s=20