Bitcoin has increased by 300% in the last three months from $10k (Oct 3) to $33k per $BTC (Jan 3). Ethereum has also increased by 270% in the same period from $350 (Oct 3) to $950 (Jan 3) per $ETH.
I started buying Cryptocurrency in early 2013 ($BTC mainly) mainly because I thought it was an interesting concept at ~$50 a coin. I ‘lost’ most of these coins as part of the Mt Gox Bankruptcy in 2014. I’m hopeful that 10-15% of our holdings may be returned soon, after seven years of waiting.
The US government has printed more than 20% of the total USD in circulation in 2020 alone (over $USD 9 Trillion) and many people have no idea we just got a lot poorer. Given this is happening globally (across governments) I’m starting to think that I should have a more significant percentage of my savings in $BTC and cryptocurrency in general over fiat ($USD). There are also lots of other benefits/value of cryptocurrency beyond inflation protection but I won’t cover them here.
Ultimately, I’d like to allocate 10%+ in Crypto, 20% in technology companies (private), 30% in real estate and 40% in public equities (mostly in tax advantaged retirement and non liquid accounts) but this will take many years and a good amount of luck, too 🙂
Given these observations, here is how I’ll modify my strategy going forward.
- Focus on $BTC and $ETH: Most of my $BTC is locked up in Mount Gox, and this counts towards my overall allocation. I assume around 15% of coins returned at some point as $BTC (not fiat). My next largest position is ETH which I’ve had for years. I plan to hold BTC/ETH/All Altcoins in a 70/20/10 ratio in terms of USD fiat value.
- Regular Purchase: I started taking 15% of my paycheck (2x per month) and purchasing $BTC and $ETC in the correct ratio (80/20), which I would ordinarily leave in fiat in a savings account. I’ve been doing this for about a month. The goal here is to remove emotion from the decision and dollar cost average over the next few years.
- Crypto Savings Account: I started to move most of my $USD out of Marcus (CDs) into BlockFi (referral link). I have kept some $BTC and $USDC (a USD stablecoin) for the last 6 months or so, and I’d rather make 6-8% interest over 0.5% interest in alternatives. Note that BlockFi is not risk free (they are lending like banks do) but they do have some strong security measures in place.
- DeFi: I have positions in all the stuff powering Decentralized Finance (DeFi) on the Ethereum network, but that is mainly for fun (which is how $BTC started for me anyway). I play around with staking, liquidity pools and lending but beware the large gas fees (I got burned). My largest position is in this DeFI Pulse Index (https://defipulse.com/blog/defi-pulse-index/) which is a weighted index of all the tokens powering DeFi.
- Feb 5 Update: Given all the growth in the last 30 days this has now also evolved into a more ‘core’ position.
I also hold small amounts of other Altcoins like Stellar Lumens ($XLM), Polkadot ($DOT), Ripple ($XRP), Filecoin ($FIL bought in the 2017 SAFT), Arweave ($AR), UNI ($UNI), Sushi ($SUSHI), Cosmos ($ATOM) as well as about a dozen others, but those are more out of interest than part of an actual strategy. I also added NFTX as an index for collectibles to the mix.
All of this is still very experimental, and I wrote this up to share more easily and get feedback. Despite dabbling for eight years, I still feel like a n00b most of the time in the crypto world.