The survival guide for crypto class of 2021: Chapter 3

One question which usually comes up is that how to add more coins to the basket. In my case I have currently 3 coins in my coin basket:

1. BTC
2. ETH
3. XRP

I have small buckets for these coins based on the ppm methodology I have described in previous blogs. These buckets are full now and I am thinking of adding another coin to this bucket.

Qualifications for a coin to be added to the bucket

As I stated in previous blog that coins are not added to the basket based on their price. Coins are purely added based on their merit. You can have your own definition of merit but it should revolve around:

1. backed by strong team
2. long-term prospects
3. resistance to pump and dump (by crypto standards)

The (in)famous Coinmarket Cap

People have mixed opinions about coinmarketcap and how fair their evaluation is. Let’s assume it is fair and accurate for now. Lets start with top 15 coins by marketcap and see where we end up with our “selection by rejection” methodology.

1. BTC
2. ETH
3. USDT
4. BNB
5. ADA
6. DOGE
7. XRP
8. USDC
9. DOT
10. UNI
11. SOL
12. BCH
13. LTC
14. ICP
15. LINK
16. BUSD
17. MATIC
18. THETA
19. XLM
20. VET

Rejection Criteria 1: Stable coins & Exchange coins

Stable coins have a great utility but they are not investment vehicles. This eliminates USDT, USDC & BUSD.

Exchange coins can be a good investment but their dependence on one exchange does not make it to my list. This eliminates BNB and UNI.

Rejection Criteria 2: Boring Forks

Bitcoin has been forked few times and Ethereum at least once. I would also add coins which are not exact forks but are based on similar source code. This takes away BCH and LTC.

Rejection Criteria 3: Invisible Hand

If there is a coin which depends upon the signaling of one person and does not hold a lot of merits on it’s own, it would also be a disqualifying criteria and that takes DOGE away.

Lets revisit our short list now:

1. BTC
2. ETH
3. ADA
4. XRP
5. DOT
6. SOL
7. ICP
8. LINK
9. MATIC
10. THETA
11. XLM
12. VET

Now I would like to eliminate coins in similar category and that takes away ADA as that competes directly with ETH. I have a fully built out position of ETH.

Reducing list to top 5.

1. BTC
2. ETH
3. XRP
4. DOT
5. SOL

This brings two good candidates to be added to my bucket: DOT & SOL.