Bitcoin Portfolio Allocation Tips Quiz

1. What is the general recommendation for allocating cryptocurrency in a portfolio?

• 50% of total net worth.
• 25% of total net worth.
• No more than 5% of one`s total net worth.
• 75% of total net worth.

2. What are some practical allocation strategies for cryptocurrency portfolios?

• Investing 100% in Bitcoin and Ethereum only.
• Focusing solely on day trading without diversification.
• The `50% Sell Rule,` Thesis-Based Holding, and Infrastructure-Based Allocation.
• Allocating all assets to high-risk altcoins exclusively.

3. How can investors balance their cryptocurrency portfolio?

• By dividing the allocation between stable assets like Bitcoin and Ethereum and more speculative investments like newer altcoins, dApps, and NFTs.
• By focusing solely on high-risk, low-reward investments without any diversification.
• By investing only in the most popular altcoins regardless of their underlying technology.
• By concentrating all funds in a single cryptocurrency to maximize potential gains.

4. What is the `50% Sell Rule`?

• Selling 50% of holdings regardless of market conditions to ensure quick returns.
• Taking profits on 50% of holdings when positions double, preserving initial capital.
• Investing all profits back into the same asset to maximize growth potential.
• Transferring all funds into stablecoins after a market surge to avoid losses.

5. What is Thesis-Based Holding?

• Allocating funds randomly without strategy.
• Maintaining positions based on specific use cases.
• Investing solely in high-risk altcoins.
• Selling all assets during a market dip.

6. What is Infrastructure-Based Allocation?

• Investing equally in all cryptocurrencies without analysis of their underlying technology.
• Dividing investments based on network fundamentals such as energy consumption and network effects.
• Focusing exclusively on the highest performing cryptocurrencies regardless of their utility.
• Allocating funds solely based on personal preferences without considering market factors.

7. How does the FI overage portfolio model work for high-net-worth individuals?

• Separating the base FI net worth from speculative FI overage to take advantage of high-risk, high-reward nature of crypto while preserving long-term financial security.
• Merging all assets into one account to minimize management efforts and expenses.
• Investing entirely in low-risk bonds to ensure maximum safety for high-net-worth individuals.
• Allocating all funds to speculative investments without any regard for stability.

8. What is the purpose of separating base FI net worth from speculative FI overage?

• To balance conviction with prudence, creating a diversified portfolio that reflects both stability and opportunity.
• To maximize profits by exclusively focusing on high-risk investments.
• To eliminate all risks associated with cryptocurrency investments.
• To ensure that all funds are allocated to stable assets without exception.

9. How does the decision of how much to allocate to crypto depend on personal belief and risk appetite?

• Decisions about allocation depend only on financial status and not personal views.
• Investors should allocate equal amounts, regardless of their beliefs or risk levels.
• The allocation is solely determined by market trends and expert advice.
• It comes down to personal belief and risk appetite; some may choose a small allocation, while others with higher risk tolerance may choose a larger allocation.

10. What is the benefit of treating crypto as a speculative asset?

• It allows for unlimited investment without any strategy.
• It eliminates all risks associated with investing.
• It helps investors navigate the complexities of this emerging market with greater confidence and clarity.
• It guarantees profits regardless of market movements.

11. What are the core strategies for diversifying a cryptocurrency portfolio?

• Avoiding all established currencies and focusing solely on new projects.
• Concentrating all funds in a single cryptocurrency to maximize profits.
• Investing only in highly speculative altcoins regardless of market conditions.
• Spreading investments across multiple digital assets to reduce risk and balance potential returns.

12. What types of cryptocurrencies should be included in a diversified portfolio?

• Just Bitcoin and Ethereum.
• Only newly launched altcoins.
• Large-cap, mid-cap, and small-cap coins, as well as stablecoins.
• Only large-cap coins.

13. What are the characteristics of large-cap cryptocurrencies?

• Are primarily focused on newly launched coins and tokens.
• Generally considered less volatile because they are more established and widely traded.
• Tend to have very low market capitalization and limited trading volume.
• Often offer the highest returns with extreme risk.

14. What are the characteristics of mid-cap and small-cap cryptocurrencies?

• Limited to only very wealthy investors who can afford to trade.
• Always stable and established with low volatility in the market.
• Guaranteed profit margins and protected against losses, regardless of market conditions.
• Offer higher potential returns but come with increased risk due to lower liquidity and market size.

15. How can investors balance long-term holdings with short-term opportunities?

• By putting all funds into the highest yielding coin for immediate profit.
• By only investing in high-risk speculative assets consistently.
• By diversifying based on the investment horizon, balancing long-term holdings with short-term trading opportunities.
• By avoiding any short-term trades to focus solely on long-term gains.

16. What is the `HODLing` strategy?

• Holding onto assets for years to benefit from long-term appreciation.
• Investing in a variety of assets for immediate returns.
• Frequently trading cryptocurrencies for short-term gains.
• Selling assets as soon as they reach a target price.

17. What is short-term trading in cryptocurrency?

• Holding assets for several years until a profit is realized.
• Investing in cryptocurrencies without much activity.
• Speculating by only purchasing high-value coins.
• Buying and selling cryptocurrencies to take advantage of price swings.

18. How can staking and yield farming provide passive income?

• By locking up assets to support blockchain networks or decentralized finance platforms.
• By exchanging assets for real estate investments for rental income.
• By participating in traditional stock market investments only.
• By buying and selling assets frequently to increase funds.

19. What are advanced diversification strategies for cryptocurrency portfolios?

• Sticking to single-coin investments to minimize complexity.
• Investing exclusively in meme coins and trend-based assets.
• Portfolio weighting, risk-adjusted models, and the use of derivatives.
• High-frequency trading and aggressive speculation strategies.

20. What is portfolio weighting?

• The act of selling assets to realize profits.
• The process of deciding how much to allocate to each asset in a portfolio.
• The method of tracking overall market capitalizations.
• The strategy of investing in only one type of cryptocurrency.

21. What are the different approaches to portfolio weighting?

• Random selection vs strategic investing.
• Day trading vs long-term holding.
• Equal weighting vs market cap weighting.
• Fixed income vs equity exposure.

22. How does dynamic allocation work in cryptocurrency portfolios?

• Focusing solely on long-term gains without adjustments.
• Adjusting portfolio allocations based on changing market conditions.
• Investing only in established cryptocurrencies without change.
• Keeping allocations static regardless of market trends.

23. What is risk-adjusted diversification?

• A more sophisticated approach that takes into account both the potential return and the risk of each asset.
• A technique that only looks at past performance of assets without factoring in current risk.
• A method that focuses solely on maximizing returns without considering risk.
• A strategy that recommends investing equally in all assets regardless of their risk profile.

24. How can investors use the Sharpe Ratio to balance risk and return?

• By ensuring a 50-50 split between risky and safe assets without analysis.
• By focusing solely on the highest returning asset in the portfolio without considering volatility.
• By comparing the return of an investment to its risk, helping to determine the best risk-adjusted returns.
• By calculating the average return of all investments without considering risk exposure.

25. What are options for risk management and speculation in cryptocurrency portfolios?

• Options give investors the right, but not the obligation, to buy or sell an asset at a predetermined price.
• Options allow investors to predict cryptocurrency prices with certainty.
• Options provide guaranteed profits in any market condition.
• Options are a type of cryptocurrency that automatically trades for you.

26. How can tokenized assets and cryptocurrency ETFs diversify a portfolio?

• By focusing solely on high-risk altcoins.
• By providing additional ways to gain exposure to traditional markets or a broad basket of cryptocurrencies.
• By avoiding investment in stocks or bonds.
• By limiting exposure to only established cryptocurrencies.

27. What is the benefit of including stablecoins in a diversified portfolio?

• To maximize returns on speculative investments.
• To eliminate all forms of investment risk.
• To reduce risk and provide a stable value during market volatility.
• To ensure guaranteed profits in all market conditions.

28. How does the inclusion of Layer 2 solutions like Polygon improve portfolio performance?

• By providing exposure to innovations that address blockchain’s scalability challenges.
• By focusing solely on speculative assets.
• By eliminating the need for traditional banking services.
• By increasing the overall risk of the portfolio.

29. What is the optimal allocation of Bitcoin and Ethereum in a traditional 60/40 portfolio?

• Approximately 3% each for BTC and ETH, with a combined maximum of 6%.
• 50% Bitcoin and 50% Ethereum.
• 40% Bitcoin and 20% Ethereum.
• 10% Bitcoin and 30% Ethereum.

30. What is the ideal allocation for maximizing the Sharpe ratio in a crypto-only portfolio?

• 50% Bitcoin and 50% Ethereum.
• 10% Bitcoin and 90% Ethereum.
• Approximately 71.4% Bitcoin and 28.6% Ethereum.
• 100% Bitcoin and 0% Ethereum.