With $1million to use, using data from (CoinMarketCap, n.d.) to determine the best strategy for maximising cryptocurrency profits. Evaluating each currency’s prospects and past performance, as well as how to best maximise profit utilising buy-low and sell-high strategies and portfolio diversification techniques, are all important to generate a report that examines these. Please refer to the appendices for a closer examination of the report.
In terms of approaching investment strategies; the focus will be on using fundamental and technical analysis in the following ways: analysing market trends, intrinsic value, long-term holdings in underlying technologies that concentrates on projects with solid fundamentals, identifying phases of crypto cycles, value investing, which finds undervalued assets based on a careful examination of financial health and real world use cases, and diversification, which spreads investments across a variety of cryptocurrencies to mitigate market volatility risks. Technical analysis involves looking at price movements that show supply and demand dynamics at work in the market. Volume analysis involves looking at how many units of a specific asset are traded over a specific period of time, such as transaction volume and rise and fall of volumes.
Regarding the rationale behind the selection of the two digital currencies; please (refer to Table 1.) for the allocation of 60% ($600,000) of the money to trade Bitcoin, and 40% ($400,000) to trade Cardano currency, based on their currency prospects, historical data and maximising profits.
Bitcoin is an asset that can resist market volatility because of its restricted supply, which is capped at 21 million coins. This helps maintain its purchasing power over time and its potential to hold value even in the face of economic uncertainty. Providing options for international transactions that are quicker and frequently less expensive.
Cardano’s beginner level and expert traders can use its interfaces, which are made to streamline intricate procedures. Partnerships with the Dish Network, which enables users to use Cardano can pay their bills from. Its blockchain integration is made possible by partnerships with merchants, which boost user adoption. Working together with academic institutions encourages blockchain literacy. The extended TOX model’s integration also makes the platform more programmable and secure, which increases its attractiveness.
According to the (CFI Education Inc, 2024) the largest cryptocurrencies list are as follows based on market capitalisation (the value of currency, multiplying the total number of shares by a share price):
Currency Position Investing Pre-Trade at 3rd November to Post-Trade at 25th November 2024:
Table 1. showing the selection rationale for the two digital currencies, and return on investment.
Although Bitcoin is the most costly asset, when combined with Cardano’s assets, it demonstrates portfolio diversity and yields a respectable return on investment of 114.24% giving a prospect profit of $1,142, 445.74 from initial investment of $1million.
Please refer to Appendix C for further illustration of the numerical calculations and assumption of transactions costs from approaching technical analysis method of volume and candlestick analysis.
Critical analysis by Jenny Cameron, MBA, Business Analyst
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