I was lucky and randomly bought a few thousand dollars worth of bitcoin over the summer. I'm now sitting on what feels like a ridiculous, short term gain to me, and I wonder if I should re-allocate some of my BTC to other coins to diversify.
How do you folks treat cryptocurrencies as an investment? I figure that at the end of the day, they're all speculative currencies. It seems to me that the current value is derived either as a perceived hedge, some kind of gold replacement, or as a bet on future advancements to allow crypto to be used more commonly in transactions, or as a possible tool for developing nations?
This is my first entry into more speculative investments, and I'm curious to hear how you all have approached investing in cryptocurrency. I went on Coinbase today and setup recurring investments on the top 5 most common cryptocurrencies to diversify. I don't know anything about any of them, but I figured that at least one of the top 5 most common coins will have some long term success. I'm a fan of dollar cost averaging. I personally believe timing any investment is almost impossible. I take it this is the strategy that you folks use too? Also, do you all typically diversify across different currencies? Do you build a structured portfolio, where you overweight certain currencies (say BTC at 30% ETH at 30% LTC at 20%, and 20% for other alt coins), and then use modern portfolio theory to structure your buy and sell events when one of the assets becomes overweight or underweight? My only concern with this more classical approach, is it seems the price action on coins moves so frequently, and I could inadvertently be overweighting some really shitty coins.
TLDR: Do you treat cryptocurrency investments with a normal approach? Passive investing, dollar cost averaging, and rebalancing?
Also, how do you evaluate different cryptocurrencies? Do you track inflows of institutional money? The volume of transactions used by each currency? How do you measure long term viability of a coin?
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