Let's say you want to invest $100 in crypto, you need to decide how much money you want to spend for each coin. There is no definitive answer to this question, as different coins have different risks and returns, and your choice may depend on your personal preferences and goals.
However, one possible way to allocate your money is to use the percentage of market cap method. This method involves dividing the market cap of each coin by the total market cap of all coins, and then multiplying that ratio by your total investment amount.
For example, if you want to invest in Bitcoin, Ethereum, and Avalanche, you can use the following formula:
Bitcoin:
($568.76B / $1,057.82B) * $100 = $53.78
Ethereum:
($222.3B / $1,057.82B) * $100 = $21.02
Avalanche:
($4.36B / $1,057.82B) * $100 = $0.41
This means that you would spend $53.78 on Bitcoin, $21.02 on Ethereum, and $0.41 on Avalanche, for a total of $75.21. You can use the remaining $24.79 to invest in other coins or save it for later.
This method is based on the assumption that the market cap reflects the popularity and potential of each coin, and that a diversified portfolio can reduce your risk and increase your returns. However, this method is not perfect, and it may not suit your specific needs or preferences. You should always do your own research before making any investment decisions. Cryptocurrencies are highly volatile and speculative. Please invest responsibly.
