Tag Archives: decred

Bitcoin Portfolio Letter: Taking altcoin profits and buying back into Bitcoin

Published / by kgao

Hi everyone, here is my second Bitcoin Portfolio Letter where I share my exact crypto investment portfolio, what trades I’ve made, and which assets I’m looking at. Each week I alternate between a portfolio letter like this one and a news letter.

Thanks!

Kevin (@kgao)

Performance relative to Bitcoin price benchmark:

I’ll release March performance results in the next letter. Probably outperformed Bitcoin due to the strong run-up of Ethereum and Dash. In January Bitcoin fell 5% and my portfolio fell 2.5%. In February Bitcoin gained 24% and my portfolio gained 29%.

Trades this month

  • Sold 5% of my Bitcoin BTC holdings when the price passed $1200. Right now I’m buying a little each day, because I think it’s underpriced due to hard fork drama
  • Sold 5% of my Ethereum ETH holdings at $43
  • Sold 10% of my Dash DASH holdings at $73
  • My general philosophy is to take small profits when I’m seeing 300%+ price spikes. In the long run my goal is to be investing with the house’s money, so to speak
  • Invested 1% of portfolio into Decred DCR at $5, then sold 10% of that when it spiked to $15

What I got right and wrong since the last Portfolio letter

  • Right that Decred DCR was a good investment – was trading at $5, now trading at $12
  • Right that Shadowcash SDC was crap – was trading at $3.50, now trading at $1.50
  • Verdict still out on Augur REP – was trading at $8.50, now trading at $10
  • Wrong on Zcash ZEC – was trading at $45, now trading at $69. I still suspect the issuance rate / mining-driven inflation is too high to be a good near-term investment but may take a small position

What I’m looking at now

  • NEM / XEM – what I like: no inflation, no PoW (blockchain is secured by a PoS-like model), incentivized staking, geographic depth (the top altcoin in Japan), potential synergy with its private blockchain solution Mijin and early but promising enterprise use cases
  • Bitcoin BTC is underpriced despite HF risks and I’m buying small amounts daily. Right now Bitcoin is 63% of my portfolio and I’d like it to be 65-70%
  • The HF debate has me increasingly concerned about the long-term viability of PoW only blockchains. All this time we’ve been concerned about external 51% attacks without realizing, like all large systems, that corruption comes from within. PoS or at least hybrid PoS / PoW may be the future
  • While I still think Monero XMR will win the privacy coin war in the short-term, I’m questioning whether its price will reflect this victory. I may reduce my position
  • Published a Crypto Cheatsheet (screenshot below) which has key facts and concepts for most of the assets in my portfolio

That’s it. Thanks for reading! Hit ‘reply’ to contact me or find me on Twitter.

How to invest in cryptocurrency if you have $10K, $100K, and $1M USD

Published / by kgao

If you have $10K USD…

Use Coinbase to buy $8K of Bitcoin and $2K of Ethereum. Use the Coinbase Vault service to store your coins and turn on 2FA.

Resist the temptation to day trade. For simplicity sake, buy all at once, or you can setup a recurring weekly or monthly buy to dollar cost average.

If you have $100K USD…

Buy Bitcoin and Ethereum and one or two altcoins depending on how well you understand them. I’ve invested in the space since 2013 and right now I own 5: Bitcoin, Ether (and a negligible amount of ETC), Dash, Monero, and Decred.

If you go beyond BTC and ETH, I can only confidently recommend Monero at this moment. Crypto changes fast so that recommendation could change in a week. But since I first bought Dash around $17, the price has gone crazy and I don’t feel confident in it anymore. Decred is a flier for me.

Use a large trusted exchange like Poloniex and GDAX and Kraken to purchase your coins – ideally in a recurring buy over a number of weeks. If you want to buy all at once, consider an OTC service like itBit. I can introduce you to some OTC brokers as well, but I’d only recommend OTC if you’re an experienced financial investor.

You can invest in exchange listed products as well, like GBTC and COINXBT. The pros include convenience, tax benefits, and some additional regulatory oversight. Cons include extra fees and counterparty risk. For more, here’s my write-up on the crypto fund investing landscape.

Keep the majority of your coins in cold storage using a service like Coinbase Vault or Xapo, or a hardware wallet like Trezor and Ledger. Electrum is also a good local wallet.

If you have $1M USD…

Continue with the above, and diversify your portfolio into a few other altcoins. Perhaps Decred or Dash or Zcash. I’d stay away from ICOs and token sales unless you really know what you’re doing.

Crypto funds become an even more attractive option, especially private funds which have investor minimums. Examples include Pantera and Logos Fund.

Dollar cost average over a number of months, or find an OTC broker.

Diversify your cold storage solutions. Don’t put all your coins in one place. Check those places routinely. Always turn on 2FA and have unique site-specific passwords and if a seed is required, save it somewhere secure.

Tracking becomes important. CoinTracking is a good tool for portfolio monitoring and reporting and taxation. I’ve tried it, but am still wedded to my hacked together Google spreadsheet.

There’s a lot more you can do to optimize your crypto portfolio as you increase your time spent and financial investment. Some of the coins offer staking services to earn a return on your holdings, eg, Dash and Decred. Follow community happenings on reddit and Slack and read read read.

But don’t day trade and don’t short, unless you want to lose money. My view is that crypto will go from a $25B market cap today to $100B by 2020. Diversify your investments, watch them closely, adjust portfolio allocations to roughly match each coin’s respective market cap, and profit.

To champagne wishes and crypto dreams! 🙂

Bitcoin Portfolio Letter: -Dash -Litecoin +Bitcoin +Monero +Decred

Published / by kgao

Given how fast crypto moves, I’m switching to a weekly letter, with a caveat: I will alternate between a “portfolio letter” which shares what I’m buying and selling, and a “news letter” covering happenings in the space. Today is a “portfolio letter”.

Overall performance:

In February, the Bitcoin price increased 24%. My portfolio increased 29%, so I outperformed slightly, due to Dash’s price rocket and Ether’s rebound. In January the Bitcoin price dropped 5% and my portfolio dropped 2.5%.

Recent trades:

Sold all of my Litecoin for Bitcoin. It had consistently underperformed Bitcoin and it hit me I had no reason to continue holding. Was only a 1% position. Not a good hedge against Bitcoin due to its strong positive price correlation, and no demonstrable progress on either technology or community.

Sold 2/5 of my Dash position at prices ranging from $45 to $75. I still hold 3/5 of my original Dash position which was acquired around $17. Believe it can be a $1B market cap asset, but I took some profits because the pump happened too fast and I have real concerns about its long-term viability, foremost among them the depth of its team. At its current price of $86 I would only buy a very small position if any.

Increased my Monero position to 3% of the portfolio and believe it will be the leading privacy-first coin. I remain interested in Zcash as well, but believe its inflation rate is still too high and past price performance too anemic to justify an investment.

Bought a tiny amount of Bitcoin after the ETF denial when it had fallen to $1150, about 1% of my total Bitcoin holdings. I remain very bullish, but I also believe that on the back of the ETF denial and the ongoing hard fork risk that Bitcoin’s market dominance will drop below 75% of the total crypto market cap.

New assets I’m looking at:

Decred – I took a small position today at ~$5, about 1% of my total portfolio, and will watch it closely before investing more. They have a similar appeal to Dash: a more clearly delineated and decentralized governance model, and a self-funding block subsidy for development and marketing. Also like Dash, you can earn a return by staking your coins and I may do that.

ShadowCash – Pass for now. Despite its recent price increase, I have too many concerns about the team’s reliability, the quality of technology, lack of a rigorous 3rd party review, and the premine. When the ShadowMarket marketplace launches I’ll take a look at it. If privacy is your bugaboo, buy Monero.

Augur – Pass for now. I remain skeptical of decentralized prediction markets. If prediction markets are so useful, why haven’t centralized ones succeeded? Not sure decentralization brings enough value to suddenly make it work. At current market prices, what they raised in the crowdsale would be worth $50-60M, and the total market cap is $88M. Seems to me they *should* have plenty of runway and budget. I’d like to see some proven use cases or demonstrable growth in usage and engagement before investing.

What assets are you looking at? What should I investigate?

Random fact
Robert J. Greer, a pioneer of asset class theory, defined 3 categories of assets:

  1. Capital assets (eg, equity, bonds)
  2. Consumable transformable assets (eg, grain)
  3. Store of value assets (eg, fiat currency, gold)

Assets can belong to more than one category. For example US Treasury Bonds are a capital asset, but also a store of value given its federal backing.