Crypto Academy Season 3 | Intermediate course by @allbert –week 3: 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.
Hi, professor @allbert thanks for the class and for sharing vital information on portfolio management for this purpose I will be analyzing two crypto-assets #Atom and #EOS both coins are operating in a separate blockchain.
Cosmos (Atom)
Fundamental analysis
Cosmos blockchain was introduced in 2014 by a group of core blockchain network contributor referred to as tender mint in 2016 cosmos network publish it project whitepaper
What makes cosmos (Atom) unique
With some limitations in delegated proof of work protocol (PoW) such as delay in processing transaction, the use of substantial energy like coals, cosmos blockchain aims to tackle this limitation by introducing more advanced processing time for users to complete transactions in very limited time-space with this cosmos users can use hybrid delegated proof of stake algorithm protocol to process faster and more secure transactions.
It aims to offer a solution to slow expensively unscalable use of PoW causing environmental harm using fossil energy.
another aim is to make blockchain technology less complex for developers using modular frameworks.
Lastly cosmos blockchain aims to make blockchain technology more interoperable for other blockchain networks to communicate with each other.
Cosmos team
Cosmos blockchain has an incredible team working tirelessly to develop and provide the best blockchain experience it users and developers the team is supported by the interchain Foundation (ICF).
Cosmos price analysis
From #coinmarketcap, Atom is ranked #34 with a 24hr trading volume of $260,904,876.16 it has a maximum supply of 260,906,513.
Atom can be traded or exchange in popular exchange platforms like binance, kucoin, huobi exchange, and more having listed in these popular exchanges will make the price of Atom have value in the market as more users will be trading and holding Atom coin for the future price increase.
Why I choose cosmos (Atom)
An intriguing ideal idea of why blockchain technology is striving in the competitive financial system is because it offers outstanding service and cosmos blockchain uses advanced technology to improve its network usage by providing a more scalable interoperability blockchain where developers can develop or work on blockchain technology with its hybrid proof of stake protocol cosmos provide fast and secure means of processing transaction with fewer fees required for processing transactions.
Interestingly cosmos blockchain is referred to as web 3.0 which makes it an internet blockchain that will solve problems encountered in the old blockchain system.
EOS
What makes EOS unique
In general, every newly introduced blockchain technology is developed or introduced to solve problems or limitations of the previous blockchain.
EOS blockchain is believed to perform over 100,000 transactions per second, with less to no transaction fee charges.
EOS is a blockchain-based decentralized open-source blockchain developing smart contract dapps for business.
Its blockchain enables the development, hosting, execution of the decentralized base scalable application for commercial use.
Support community between internet users to create secure, authentication access with data hosting management usage among developers.
EOS aims to solve problems concerning scalability, speed and, flexibility in the blockchain ecosystem.
EOS blockchain, in general, support the development of blockchain-based application it also provides web toolkits for interface development.
Why I choose EOS
Aside from solving transaction problems faced in blockchain technology providing over 100,000 TPS, eos provide users with basic tools for developing a blockchain-based application that is used by commercial business users to integrate a better blockchain experience to users.
With this provided service EOS blockchain has good future potential which will boost eos value in near future.
Being a blockchain-based application-based development blockchain eos team consist of a group of engineers/experts in software development.
market analysis
EOS market or exchange is widely distributed and used for trading multiple crypto pairs in different exchange platforms like binance, crypto.com exchange, and lots more EOS has a 24hr trading volume of $1,575,295,888 with a circulating supply of 960,555,467.
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 will be using my binance trading app to complete this task below is a screenshot of my binance verified exchange account.
First step before executing any trade I will make sure I have minimal required deposited token in my account.
To buy eos token I will need to go spot trading where multiple pairs can be traded. to locate spot trade I will click on the trade button from my trading app homepage.
On clicking on trade from the homepage I will be redirected to spot trading where I will be trading EOS/USDT pair.
- From the EOS/USDT pair, I will be click on buy which means I will be selling USDT to buy EOS.
- I will be inputting buy order which is $10.4605 worth of EOS for 10.4605USDT on filling the buy other I will click on buy and wait for my order to be filled.
- When the order has been filled which I will receive $10.4605 worth of EOS on my wallet balance shown below.
Below is the final screenshot of my purchase EOS equivalent to 2.8 eos at the price of $10.3605.
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)
Dollar-cost average is an investment strategy that is adopted either by beginners or experts both parties can take advantage of this strategy and make a profitable income from their bought assets.
In addition, the dollar-cost average is a risk management strategy that is used by investors or traders to minimize the risk of losing funds in any investment.
For example, if an investor decides to use all his capital to buy a particular token in the market at $1000 and unfortunately due to market correlation, the price of his bought token went down to $500 it means such investor is losing $500.
Now let's say such an investor chooses to purchase such a token using the DCA strategy and split his buying into 5 stages buying every time the token falls a certain percentage this will minimize his loss to minimally.
Atom price simulation
For more clarity, I will be using a bar and alphabet A to D to represent the price tag of the atom bought on weekly basis.
A = $12/atom
B= $ 11.5/atom
C = $ 9/atom
D = $ 8.5/atom
I will use $100 to buy Atom for a month which means every week I will be buying $25 worth of $Atom token
Week one at A bar price per Atom token was $12 with $25 I will be getting 2.0833 Atom
$25/12 = 2.0833 atom
Week 2
$25/11.5 = 2.173913 atom
week 3
$25/9 = 2.7778 atom
week 4
$25/8.5 = 2.94118 atom
Total atom accumulated over the month
= 2.0833 atom + 2.173913 atom + 2.7778 atom + 2.94118 atom = 9.976193 atoms
Suppose the current price of an atom is $8.5 I will multiply my total accumulated atom by the current price which will be
9.976193 atoms × $8.5 = $84.797641
$100 - $84.797641 = $15.20236
This means by the end of the month I will be in loss of $15.20236 for buying atoms at different time intervals.
Suppose I buy in all one time with $100 at the initial bar A
I will be having $100/12 = 8.3333 atom
Multiply by the current rate will be $8.5 × 8.3333 = $70.833
$100 - $70.833 = $29.166
Here I to have been in loss of $29.166.
With this purchase, I find out DCA was more profitable since I was down with $15.20236.
EOS price simulation
Circle 1 = $3/eos
Circle 2 = $2/eos
Circle 3 = $1.5/eos
Circle 4 = $1.2/eos
I will be using $20 on daily basis to buy $eos
Day 1
$5/3 = 1.6667eos
Day 2
$5/2 = 2.5eos
Day 3
$5/1.5 = 3.3333eos
Day 4
$5/1.2 = 4.1666eos
At the end of day 4, I will be having a total sum of 11.6666eos.which will be multiplied by the current price I.e 11.1666 × $1.5 = $17.4999
Suppose I bought $20 worth of eos on day one for $3 I will be left with $20/3 = 6.6666
eos
6.6666eos × $1.5 = $10 this means by day 4 my $20 will become $10.
From the two price simulations carried out, I can be deducted DCA is very important for minimizing risk for investors.
Conclusion
It's important to note that investment involves risk but proper fundamental analysis carried out before investing in any project can reduce the risk of losing funds.
DCA is also a good investment too for maximizing profit and loss funds in investment.
Hello, @mccoy02 Thank you for participating in Steemit Crypto Academy season 3 week 3.
Thanks for the feedback professor.