Nothing has been more important to me than organizing my crypto portfolio into well-defined sectors. Creating a system or framework for analyzing, researching, and investing in digital assets is crucial in the fast-paced world of cryptocurrency. Today, we're diving into one of the most foundational sectors: the currency sector. But before we get into the specifics, let me outline the five key areas I focus on: currencies, smart contracts, artificial intelligence, DeFi, and NFTs & gaming.
Using Sectors to Invest in Crypto: Youtube Video
The Power of Categorization
This list isn't exhaustive. You can broaden and complicate it to suit your needs, including niche categories like meme coins, privacy coins, or interoperability systems. The goal is to give you a structured approach to understanding and analyzing the diverse array of digital assets, each with its unique utilities and functionalities. This approach helps you classify and analyze them meaningfully, ultimately leading to a more balanced investment portfolio.
The Currency Sector: The OGs of Crypto
The currency sector includes the original gangsters of crypto: Bitcoin, XRP, XLM, Bitcoin Cash, and Litecoin. These have stood the test of time and remain integral to any well-rounded portfolio. Interestingly, in my own crypto portfolio, I have the most money invested in this sector, but with the fewest coins. My holdings are primarily in Bitcoin and XRP.
This preference is personal. While Bitcoin Cash and Litecoin offer trading opportunities, I don't see them outperforming Bitcoin long-term. Instead, I prefer XRP and XLM for their currency functionality, coupled with decentralized exchanges, AMMs, and the ability to tokenize assets. I'm considering adding XLM to my portfolio. What do you think? Should I go for it?
Understanding the Utility
According to Grayscale, the currency sector includes Bitcoin, XRP, Litecoin, and Bitcoin Cash. These assets serve crucial purposes such as:
Medium of Exchange: Facilitating transactions without intermediaries.
Store of Value: Safeguarding assets from unsound fiscal policies or geopolitical issues.
Payments: Enabling fast, cheap, international, and domestic transactions.
Base Currency for Trading: Using them to trade for other cryptos.
Financial Inclusion: Providing financial services to the unbanked and underbanked.
Despite their age, these currencies remain highly relevant. Bitcoin is often referred to as digital gold, while XRP and XLM excel at fast and cheap payments. They also act as a base currency for trading other digital assets and provide essential financial services to those without access to traditional banking.
Are These Cryptos Outdated?
While these cryptocurrencies have been around for a while, they're far from outdated. They remain some of the most valuable assets in the crypto space. Bitcoin, for instance, has consistently held the top spot, and XRP is in the top ten. These assets are integral to any diversified portfolio.
Year-to-Date Performance
As of June, the currency sector has outperformed other sectors, driven primarily by Bitcoin's growth. However, I expect XRP, XLM, and even some Bitcoin forks to show growth as well. The AI sector has also seen significant growth, highlighting the importance of a balanced approach.
The Importance of a Balanced Portfolio
One of my favorite sectors is smart contracts, essential for gaming, NFTs, and DeFi. However, this sector has underperformed year-to-date. If you had all your investments here, you'd be missing out on the gains seen in other sectors. This demonstrates the need for a balanced approach, capturing growth across different areas.
Crypto is cyclical, not just in terms of bull and bear markets but also within sectors. A strategic, balanced approach ensures a more enjoyable and successful crypto journey. You won't be left waiting for a specific crypto to take off—you'll see steady growth across your portfolio.
Join the Conversation
Let me know your thoughts in the comments. Should I add XLM to my portfolio? And as always, please like and subscribe. The revolution will be televised right here on Jungle Inc.
By focusing on these sectors and maintaining a balanced portfolio, you'll be better prepared to navigate the volatile crypto market, achieving success through every cycle.
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