What I am doing during the hard fork drama

The possibility of a hard fork is on everyone’s minds. It’s reflected in Bitcoin’s price volatility, in the altcoin run-up, and in the toxic and sometimes panicked discussions on r/btc and r/bitcoin. Many great companies and thought leaders in the space have either taken positions or discussed what they have done / are planning to do in such an event. There’s never been more to read and analyze and for a text junkie like me it’s fantastic (in a way).

What should you do with your Bitcoin portfolio right now?

The safest answer is nothing. Just hold onto your Bitcoins and do nothing until (or if) a hard fork happens. I expect the community will come to a resolution by July or August, if not sooner. The price will continue to be volatile but in the long-run (1-year plus), there is no doubt in my mind Bitcoin is the cryptocurrency leader and won’t lose its position.

If you only hold Bitcoin, I recommend diversifying into altcoins in a rough index-like approach. For example Ethereum is roughly 1/4 of Bitcoin’s market cap, so it would be good to eventually have a comparable stake in ETH. You may not want to buy that position all at once, because I think altcoins are overvalued right now. Dollar cost average and invest weekly. My own portfolio right now contains BTC, ETH, DASH, XMR, and a little DCR.

Here’s what I’ve done:

I sold ~5% of my Bitcoin stash in early March when it hit the ATH, and then bought ~1% back after the dip to $1150 brought on by the SEC’s denial of the COIN ETF. Right now the price is trading around $950. It feels low, but it could go lower. I will probably dollar cost average and steadily buy more. Sub-$1000 Bitcoin just doesn’t reflect the value in the network and community and technology. This is more stark and apparent when you compare Bitcoin to the recent price performance of altcoins like Dash and Monero and even Ethereum. But because the next few weeks, maybe months, will continue to be volatile, dollar-cost-averaging seems a better strategy than a big one-time buy.

While altcoins hold promise and are good for portfolio diversification and network innovation and potential upside, Bitcoin is still the best bet in the cryptocurrency space and the network that’s likely to win. When the hard fork drama is resolved, the price will rebound too and probably with a vengeance. Once I figure out exactly how and what I’m doing to buy back in, I’ll share in the portfolio letter that I send around.

Let me know if you have any questions!

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