Top 5 Crypto Picks for 2021: Best Risk vs Return portfolio

4154 that's the number of projects that 
are currently listed on coin market cap   with so many projects to choose from how 
can you tell which ones you should buy well   i'm assuming that your goal will be to get the 
highest returns as possible and i'm going to be   honest it's impossible to predict the future but 
there are some things you can take into account   in this video i'm going to discuss my process 
when building a portfolio and to do this i'm   going to discuss a couple of coins and tell you 
why i chose them hopefully these coins are going   to do well this market cycle and i'll discuss 
why i think that will be the case i'll start   with the stable of every cryptocurrency portfolio 
being bitcoin so no surprise there bitcoin is the   first real cryptocurrency it's decentralized it's 
a great concept an amazing technology we know that   there's already thousands of videos explaining 
that but what's really interesting for us that   is the return if we go back in time to the moment 
where i uploaded my first video on youtube which   was on july 11th if you would have bought bitcoin 
at that moment when it was around 9 000 us dollars   your investment would have increased with around 
270 seeing that now it's sitting above 34 000   us dollars so if you bought then you would almost 
have done a 4x by now and bitcoin is arguably very   overextended at this moment in time not trying to 
say that the rally is going to stop anytime soon   but you can't deny that buying now holds a lot 
more risk than buying back in july for people   who are afraid to buy bitcoin or are looking 
for the perfect time for it well i got some   bad news timing the market is quite impossible 
there are however some strategies you could use   when it comes to buying bitcoin i already created 
a video on that subject and i'll add a link to   that in the description and i'll also add it 
right here in this video i go over the strategy   of dollar cost averaging so objectively speaking 
bitcoin can get you some great returns but a lot   of people claim that it's a very risky investment 
in order to determine the risk fees to be barred   the sharpie ratio was invented so what is the 
sharpie ratio well it was developed by nobel   laureate william f sharpie and is used to help 
investors understand the return of an investment   compared to its risk you can calculate a sharpie 
ratio by taking the return of your portfolio   minus the risk-free rate and dividing that 
by the standard deviation of the portfolio's   excess return there are however some issues 
when talking about the sharpie ratio in regards   to cryptocurrency when plan b mentioned 
the sharpie ratio of bitcoin on twitter   he got a response from nasim nicolas taleb who 
is a famous lebanese american essayist scholar   mathematical statistician and former option trader 
and risk analyst he said that the sharpie ratio   does not work for bitcoin so take the following 
chart that i'm going to use with a grain of salt   so this chart was created by willy woo and it 
shows the sharpie ratio of bitcoin compared   to other assets the higher the ratio the better 
so this chart compares the following assets   bitcoin gold us stocks u.s real estate bonds 
and emerging currencies and it calculates the   sharpie ratio over a four year hold period 
as we can see bitcoin comes out on top   so this means basically that bitcoin proves to 
be the investment with the best ratio between   returns and risk as i've mentioned before 
there are quite some reasons why you shouldn't   take the sharpie ratio of cryptocurrency too 
seriously but it's interesting to note to say   the least so back to our portfolio um when 
you're building a cryptocurrency portfolio   i in my opinion you should start with bitcoin 
it's arguably the one with the best returns   compared to the risk there are charts we can 
look at to illustrate this point and i'll start   with the bitcoin dominance chart this chart 
is a comparison of bitcoin's market cap with   the overall crypto market and if we uh start 
at the dip earlier this year and we go until   now we see that there is a rise of almost 11 uh 
bitcoin's dominance is currently sitting above   70 there are multiple approaches we can take uh 
to prove why bitcoin is arguably one of the best   investments in cryptocurrency and one i would 
like to take is by comparing it to altcoins   if we take the litecoin bitcoin chart and we 
start at the dip earlier this year we can see that   litecoin slowly bled versus bitcoin we can take 
numerous other altcoins and charts and the result   would be the same there are of course always 
exceptions so what am i trying to say with this   well if you buy an altcoin you would want it 
to outperform bitcoin else there was no point   in buying it it would have been a better move to 
just buy bitcoin and i understand why you would   want to buy an altcoin if you buy an altcoin 
with a really small market cap well that would   require a whole lot less volume than bitcoin for 
example in order to go 10x or 100x but the point   of this video and what i'm basically trying to 
say is that when you're building a portfolio you   shouldn't just try to blindly chase profits but 
you should also take risk into account uh with   the examples that i've mentioned the sharpie ratio 
the dominance and the charts where altcoins bleed   towards bitcoin i try to illustrate that there's 
a whole lot less volatility and risk with bitcoin   than in comparison to an altcoin and that's why 
the biggest part of my cryptocurrency portfolio   consists out of bitcoin when you're buying alts 
you should try to search for alls that you think   will outperform bitcoin and you should note that 
these coins will probably have a lot more risk   and volatility in comparison to bitcoin so with 
that being said let's get into our first altcoin   ethereum erc 20 tokens smart contracts d5 there 
are quite some valid reasons why you should get   into ethereum but we can talk about the technology 
all day what interests us is the returns and this   again illustrates the importance of bitcoin 
if bitcoin is able to hold the 20 week moving   average as support ethereum tends to take off so 
for people who don't know what the moving average   is it's a price-based lagging indicator that 
displays the average price of security over a set   period of time if we talk about the 20 week moving 
average it takes the average price of the last 20   weeks so in my charts you'll see a green line and 
that green line is created by taking the average   price of the last 20 weeks so the first example 
that i'm going to use is in quarter one of 2016.   here we can see that bitcoin holds the 20 week 
moving average as support and if we then take a   look at ethereum we see that it's shot up quite 
significantly the second example happened one   year later bitcoin was again able to hold support 
on the 20-week moving average in quarter one if   we then look at the ethereum chart we see that it 
again took off quite drastically we can also see   the opposite happening when bitcoin is not able 
to hold the 20 week moving average as support this   happened again in quarter 1 of 2018 bitcoin fell 
through the 20-week moving average and if you look   at the ethereum chart we see quite a drastic drop 
of course these are just trends and it doesn't   mean that it happened in the past that it have 
to happen again but they're quite interesting to   look at there's also the fact that ethereum tends 
to do well in quarter one every year if we take   the ethereum bitcoin chart of the last couple 
of years we see that if you bought ethereum at   the end of the year it always performed quite well 
against bitcoin this year seems to be a little bit   different we're still quite down but bitcoin is 
seeing a huge price surge at the moment and i've   mentioned before when bitcoin rises drastically 
like this other coins tend to sit down and watch   it's quite possible that when bitcoin starts to 
slow down and it goes sideways and it's able to   hold the 20 week moving average as support and 
then it's really possible that ethereum might take   off we've already seen this happening earlier this 
year in summer when bitcoin started to go sideways   and it stayed hanging around the 20-week moving 
average it went down but it didn't go far so this   gave the market confidence and altcoins started 
to take off so as you can see there are quite some   opportunities with ethereum and next to bitcoin 
it's arguably one of the best performing coins   when taking risk into account this is why the 
second biggest part of my portfolio consists out   of ethereum so you might wonder if i think that 
bitcoin and ethereum perform so well why should   i even bother expanding my portfolio why don't 
i just go all in in bitcoin and ethereum i want   to expand my portfolio and diversify by buying 
multiple assets but i'll only buy more coins   if i believe that they're going to perform well 
versus bitcoin and ethereum for the upcoming coins   i'm not going to go into too much detail not like 
i did with bitcoin and ethereum this is simply   because there isn't that much data for these coins 
yet they haven't been around as long as bitcoin   the main reason why i bought some of these coins 
is because i believe they have the potential to   perform well versus bitcoin or ethereum the first 
coin that i'll discuss is ada so an important   question to ask when adding ada to our portfolio 
is will ada outperform bitcoin and ethereum   sure it carries more risks more volatility 
but i can definitely see potential it has a   big community supporting it the technology and the 
solutions get peer-reviewed before implementation   and it provides solutions for interoperability 
scalability and sustainability so how did it   perform well only this year from the bottom of 
the market until now you would be up over 700   percent that saying that it's done very well is 
an understatement like i mentioned before with   ethereum when bitcoin starts to calm down because 
it's really pumping like crazy at the moment   but when it starts to go sideways and it can hold 
a 20 week moving average as support we might see   ada make a move buying now is of course a lot 
more risky than it was for example in summer   but i definitely think ada has a potential this 
market cycle like i mentioned before i'm not going   to go into too much detail about the following 
coins there simply isn't that much data yet   but i just wanted to mention why i picked them 
the next coin would be dot so i talked about   polka dot already on this channel 
important things to note are the team   the interoperability the scalability and so on 
polkadot is still a very young coin there's almost   no data yet but i really think that it has 
the potential and it might play an important   role this market cycle if we look at the dot 
bitcoin chart we see that at launch polka dots   saw a significant pump and after that 
it's slowly started to bleed against   bitcoin this is quite normal when a new project 
launches there's a lot of people following in but   now the last couple of weeks we're seeing a small 
breakout and again it's still too early to tell um   if this breakout will continue or what is going to 
happen we'll have to wait to see what bitcoin does   but again i want to say that i truly believe that 
bitcoin that polka dot has potential this market   cycle and that brings me to something completely 
different which is the cell token the cell token   is the native token of the celsius network and 
i've already talked about it numerous times on   this channel i already created a video where i 
discuss why i think the cell token will increase   in value i'll add a link to it here and in the 
description and most of these points still stand   there's also another thing people from the us will 
be able to start earning and sell somewhere this   year so we might see another price pump do note 
that the celsius network is categorized under   centralized finance so the cell token will rise 
and fall with the actions of the celsius network   the first time i talked about cell was on 
august 16th and the price then was 40 cents   if we then take the price today we see an increase 
of almost 1 500 percent which is really amazing   on the celsius bitcoin chart you can see that the 
cell token has been performing really well against   bitcoin so and that's basically the biggest part 
of my portfolio there are some other coins uh i   think it's litecoin link v chain snx matic orn and 
a couple of more but they aren't really that big   represented like the coins that i mentioned before 
so of course there are a lot more coins out there   that could be really interesting but with this 
video i wanted to give you a basic idea of how you   could structure your portfolio another point that 
i wanted to make is that bitcoin really is king it   dictates the crypto market and you should take 
this into account when building your portfolio   if you want to add altcoins always try to search 
for coins that you believe will outperform   bitcoin if not or if if you have doubts just 
by bitcoin it has been performing so well   and it really has a good risk to reward 
ratio maybe one more interesting thing   to add is that currently my portfolio ratio 
is let's say 50 bitcoin 30 ethereum and 20   uh more altcoins uh i'm no means saying that 
this is the ratio that you should go for   but i'm pretty happy with this ratio so that was 
it for this video it was a little bit longer than   normal but i had a lot to say i guess i hope 
it was a little bit clear and it was helpful   if you have any questions just leave 
a comment or join my discord server   here we can discuss cryptocurrency and the 
stock market in general basically finance   in general i'll leave a link to that in the 
description i want to thank you for watching   if you liked the video please leave a like and 
subscribe again thanks for watching and bye

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