How to bump up your portfolio with Cryptocurrency
Why cryptocurrency is the future of trade and commerce.
(Note: Please do not consider this article as professional investment advice. That being said, we do think bitcoin has tremendous application in the world.)
Over the last ten years, the world of crypto has shown many developments. From digital art pieces (NFT’s) to in-game currencies like Axie Infinity, the potential application for cryptocurrency remains immense. And in this market, the investment options for cryptocurrency range aplenty and the potential returns are high.
If you’re looking into investing into cryptocurrencies to spice up your portfolio, here’s unique features of each cryptocurrency, it’s strengths and it’s weaknesses.
But first let’s talk a bit about cryptocurrency and why it is still so volatile.
It’s important to note that cryptocurrencies like Bitcoin, Ethereum and others are still being developed as assets and therefore its use is still not clear. While the technology of tokenizing and virtual currencies hold potential, we must look into the whole of what cryptocurrencies are being used for. Most of the coins today are still ventures. This means that the majority of investors today use bitcoin and other cryptocurrency for capital gains, not sources of income like dividends from a stock or interest payments from a bond.
When it comes to investment strategy, the consensus is clear. Adding bitcoin or any other crypto should be a small part of a large portfolio. If you’re a new trader looking to jump into the world of crypto, here are some cryptocurrencies to consider.
Founded in 2009 by mystery man Satoshi Nakomoto, Bitcoin represents the first currency to use the blockchain technology. In its 10-year journey, Bitcoin has come a long way and is still booming in capital gains.
Current market capitalization : 695,598,772,781
Price as of Jan 1st, 2021: 32,127.32$
Price as of Feb 21, 2022: 36,742.46$
Second in line only to bitcoin in market capitalization, Ethereum remains a popular option for investors to consider when buying crypto. Ethereum has a wide range of applications and potentially could be used for even more reasons. The largest NFT market (opensea.io) deals only in Ethereum (More specifically wrapped Ethereum called WETH)
Current market capitalization : 301,222,684,974
Price as of Jan 1st 2021 : 743.7$
Price as of Feb 21st 2022 : 2516.89$
Launched nearly two years ago, Solana has had a strong performance since its inception. Starting off in 2021 with the price of 1.52$, Solana has improved its price by 11,150%. Compared to Ethereum, Solana offers a way to conduct virtual currency transactions for much cheaper. The only trade-off is a much less secure system for trading.
Current Market Capitalization: 26,148,676,191
Price as of Jan 1st, 2021 : 1.89$
Price as of Feb 21st, 2022 : 82.46$
How to add cryptocurrency to your portfolio in Dubai
As per UAE law, you cannot buy goods in exchange for crypto because it is still illegal.
But with regards to trading cryptocurrency solely for capital gains, it is possible to buy and sell crypto. In 2021, the SCA (Securities and Commodities Authority) signed agreements with DAFZA, DMCC and DWTCA to allow crypto-related businesses to receive a trading license for operation in the UAE.
Furthermore, as part of the Central Bank of UAE’s 2023–2026 market strategy, one of the 7 key objectives is the issuance of digital currency in the form of Government issued coins.
When it comes to buying cryptocurrencies in the UAE, the process is quite simple :
- Pick one of the many trading platforms that sell crypto today (We recommend E-toro for new investors)
- Provide all relevant details like your ID and other financial information if necessary.
- Use your credit or debit card to deposit cash into your trading account.
- Get started by buying cryptocurrencies of your choice (We recommend you research your choices beforehand thoroughly.)
Here are some potential options for purchasing crypto.
- Cash app
- CEX IO
Do’s and Don’ts when it comes to buying crypto
Do use trusted platforms:
The world of crypto trading is volatile. A trusted exchange platform to handle your money takes away a large part of the headache when it comes to trading. Platforms like E-toro and Coinbase are trustworthy places to trade your money for crypto. Be watchful of scams and do not give out your e-wallet information to strangers.
Don’t put all of your money in crypto:
After reading and researching many articles, We find the consensus remains the same amongst industry experts. Investing in crypto should be approached with caution. While having the potential to provide high returns, it is extremely volatile and could cost you a lot of money. A consensus on the ideal proportion among industry and investment experts ranges from 1 to 5%.
(This range comes from a statement by Nitin Kamath, founder of Zerodha, Indian financial services company.)
(Note : If you have a 3 fund strategy, maybe you could add crypto but not in a large amount, making it one stock, one bond and one cryptocurrency.)
Do research into the crypto you’re buying:
Not all cryptos behave the same. The price ranges are extremely vast from bitcoin costing 42,000 $ and coins like Tether and Cardano priced around 1$. It’s also important to figure out what potential applications each crypto has and if you see the market for those applications in the long term. Each crypto will have a different volatility and price. Study its trading history to understand its behavior and invest accordingly.
Don’t rule out Crypto-ETFs as an investment option:
If you’re still unsure about holding actual crypto as an asset because of having to shift away from a traditional exchange to invest, try Crypto-ETFs. The concept is still new, but has been adopted by countries like Canada, Brazil, Europe and Dubai. The selling point of an ETF is you’ll be able to invest in a range of crypto currencies within an established exchange market that is regularly monitored. You also won’t have to bother with things like public and private keys and can invest in crypto like any conventional stock.
Want to get crypto-like returns but have the safety of physical assets?
While Utopian Global does not provide investment plans for cryptocurrencies yet, our CASHETS™ Infinity Vault can give you up to a 30% yield with our lucrative portfolios dealing in metals, minerals, real estate, fast moving consumer goods and much more!
If you have any queries or doubts, head to our FAQ’s to understand a bit more on how we can serve you in your investment journey.