CoinMarketCapFinalPaper_OSnyder120123

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Community College of Baltimore County *

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335

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Finance

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Feb 20, 2024

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CoinMarket Cap Final Paper December 1, 2023 By Olivia Snyder FINC 335

Executive Summary In the six-week trading simulation on CoinMarket Cap, I strategically managed a virtual portfolio with an initial investment of $20,000. My decisions aimed to balance risk and potential returns. Notably, I chose not to invest the entire amount upfront, reserving funds to mitigate potential losses. This prudent approach provided a financial cushion and flexibility to capitalize on emerging opportunities. Decisions and Rationale 1. Initial Investment Strategy: I opted not to spend the entire $20,000 at the beginning of the simulation. This decision was grounded in risk management. By holding back funds, I ensured a safety net in case any particular stock in my portfolio experienced a decline in value. This strategy allowed for a more measured and resilient investment approach. 2. Buying Decision: Solana (SOL): Over the six weeks, I observed the consistent growth in the value of Solana. Recognizing its upward trend, I strategically increased my investment in Solana, buying an additional 30 units in week 2 and another 60 units in week 4. This decision was informed by the positive trajectory of Solana's value, leading to substantial gains for the portfolio. 3. Selling Decision: Ethereum (ETH): When Ethereum's value started to decrease after a significant increase, I decided to sell my holdings. This preemptive action aimed to protect profits and reallocate funds to potentially more lucrative assets. This move resulted in a profit of $667.29, demonstrating the effectiveness of a proactive approach to portfolio management. 4. Exchange Decision: No Exchanges Made: Throughout the simulation, I did not engage in exchanges, focusing instead on strategic buying and selling. This decision was based on the stability and performance of the selected assets in the portfolio, minimizing unnecessary transaction costs and potential risks. Results of Cryptocurrency Portfolio: At the end of the six-week period, the portfolio value stood at $13,913.93, representing a 4.93% increase. The decision to invest strategically in Solana played a pivotal role in the positive performance of the portfolio. Solana's value almost doubled over the simulation period, contributing significantly to overall gains. Impactful Changes: The most impactful decision was the consistent investment in Solana, a cryptocurrency that demonstrated robust growth. Additionally, selling Ethereum at the right time and reallocating funds proved to be a crucial move in preserving profits and adapting to market dynamics. Lessons Learned: One key lesson learned is the importance of diversification and careful consideration of a cryptocurrency's growth potential. While high-value stocks may seem attractive, the simulation highlighted the value of investing in assets with substantial room for

appreciation. In hindsight, avoiding extremely expensive stocks could have been a wiser strategy, focusing on assets with a higher likelihood of value appreciation. Data Portfolio Week Number: 6 Portfolio Value: $13,913.93 Portfolio Percentage of Increase / Loss: 4.93% Amount Unspent: $4,074.77 Portfolio: Conclusion The CoinMarket Cap trading simulation provided valuable insights into effective portfolio management and decision-making in the volatile cryptocurrency market. The success of the portfolio was closely tied to strategic investments, timely selling, and a cautious approach to risk. In future simulations, a more nuanced strategy, balancing high-potential assets with lower-risk options, would be implemented to further optimize portfolio performance.

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