Zero Equilibrium Crypto Asset Watch: Introducing Alternative Coins

By Chinedu Okoye 



Overview:

We review the performance of our crypto portfolio from the last post in order to assess performance in the past three weeks, and make a case for four additional crypto assets that have been on our watchlist for the past month.

The table below shows our crypto portfolio weightings Price Targets; entry positions and current prices (16:59 Nigerian Time).

As earlier stated, we've diversified our crypto portfolio into five as weighted below. This helps maximize returns and balances out risks in the 12 months timeframe in our scope.


Weightings & Allocations:

Crypto| Weight%| Price Target|. Entry| Spot Price
BTC.   |40%         |$130k         | $94.5   | $100k
USDC |15%         |N1,920        |N1,734 |N1,622
PAXG | 15%        |$3,000        | $2,645  | $2,625
DGX   |15%         |$120           | $85       | $82.96
XAUT | 15%.       |$3,005        |$2,648. | $2,640


BTC/USD: Bitcoin has the largest weighting as it is the most dominant of cryptos and a major market mover. USDC is a Naira hedge and qualifies as cash; whilst PAXG, DGX and XAUT are tied to spot Gold.

Bitcoin has risen the most as well in the past month, and represent the most gains in our portfolio in the past 3 weeks.

(Chart 1: BTC/USD)

Spot Gold has been weak in the past two weeks, struggling to sustain gains above the $2,700 level,and declined 0.29% month-to-month to $2,658.60 as shown in the chart below.

(Chat 2: Gold Spot)

This explains the decines seen in the tabe above in all three Gold tied Cryptos.


DGX/USD: Down the most by -21.42% month-to-month as shown in chart 2 below. More modest slides were seen in the two other Gold coins XAUT (chart 4) and PAXG (chart 5). DGX is $2 below entry levels.

(Chart 3: DGX/USD)


XAUT/USD: Down 1.74% month-on-month and $8 below entry levels. 

(Chart 4: XAUT/USD)


PAXG/USD: Down mildly on the month the Crypto pair trades at $2,624, $35 below Gold spot. The mirror movement in charts 3 and 4 relative to chart 1 (Gold), shows and confirms the correlation to the price of the yellow metal.


(Chart 5: PAXG/USD)



Explaining Gold Cryptos Mirroring Spot Gold Price Movements:

DGX also showed similar correlation, but because a unit token represents a smaller fractional amount of physical gold, the margins are lower but come with the possibilities of intermittent price swings.

Thus, the only inhabitants to our price level actualization in the 12 month tim frame, is a tepid price movement in Gold, which we do not foresee as the yellow metal is holding strongly above its new albeit lower support of $2,600.

USDC: This is a cash assets for Naira investors that present upsides and hedge against Naira exchange rate depreciations. At N1,622/USDC, the coin has fallen N112/$1, owing to the recent strength in the Naira at both the NAFEM and Parallel markets.

Our stance on USDC is to convert it to alternative coins — a new addition to our portfolio explained below.


(Chart 6: USDC/NGN)


Alternative Coins:

To gain more exposure to Cryptos assets that benefit from the BTC craze, we've added three (3) alternative coins, namely; Ripple (XRP); Ethereum (ETH); Bitcoin Cash (BCH) and Litecoin (LITE).

XRP/USD: At $2.60, XRP/USD is up +370.53% in the past month, dwarfing BTC's +29.72% [see chart 1] in the same timeline.

(Chart 7: XRP/USD Live Luno Quotes)


ETH/USD: Up +34.51% in the past month, Ethereum stands at $3,986, outperforming BTC/USD by 479 basis points.

(Chart 8: ETH/USD Live Luno Quotes)


BCH/USD: Bitcoin Cash also outperformed BTC adding $251 month-on-month to $621, a 64.74% return.

(Chart 9: BCH/USD Live Luno Quotes)


LTC/USD: Litecoin added +83.98% month-on-month making it the second best performing Alternative coin relative to BTC/USD after Ripple.


(Chart 10: LTC/USD Live Luno Quotes)


Adding Alternative Crypto Assets to the Mix:

Assessing the performance of the above we discoverred that the above coins posted more returns in the past month than the leading crypto asset (BTC). With XRP more than trillio, LTC almost doubling and BCH rising over 60%. Ethereum the least performer in the watchlist rose by over a third. 

Rankings:

Below is a grouping of  the above Alternative Crypto Assets from the best to worst performing:

1. XRP/USD: +370.53%
2. LTC/USD: +83.99%
3. BCH/USD:+64.74%
4. ETH/USD: +34.51%

Given that the above performance of our Alternative coins we see a compelling case to diversify into these coins on equal weightings, funded by the 15% USDC allocation, i.e., (3.75% per coin) and an addtional 5% from Bitcoins weighting/allocation for an equal additional split of 1.25% or ¼ of 5% gain per coin to make a total of 5% allocation for each of these alternative coins.

Re: Weightings

In light of the above we make changes to the weights of our Crypto Portfolio. While the old weightings carry a 15% allocation to USDC, the recent rise in the Naira makes for a case to liquidate (as we have), and transfer it to the above alternatives. 

(Chat 11: Prior Crypto Asset Allocation)

New Weightings Become; 

BTC: 35%
ALT: 20%
DGX: 15%
PAXG:15%
XAUT:15%



(Chart 12: New Weightings excl. USDC)


From the above, USDC goes to zero in favor of alternative coins ("others"" in green) carrying a 20% overall weight. The fifth allocated to "others" would be evenly split (5%) as chart 13 below indicates.

(Chart 13: Alternative Crypto Inclusive Weightings) 


The above allows for a broadened portfolio which is both defensive and growth fueled with reasonable expected returns. The gold linked cryptos would offer stability, whilst BTC leads gains to be consolidated by exposure to the aforementioned alternative coins.


DISCLAIMER: THIS IS AN UNSOLICITED OPINION AND IS NOT MEANT TO BE INVESTMENT ADVICE. WE ARE LONG: BTC, USDC, DGX, PAXG, XAUT, BCH, XRP & ETH.




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