Tag Archives: portfolio letter

The 4th Bitcoin and Crypto Portfolio Letter

Published / by kgao / Leave a Comment

Hi everyone, it’s been awhile since I sent an update. But if the crypto market continues to perform the way it has, I should probably just shut up 🙂

The following assets represent >1% of my current portfolio:

  • Bitcoin: 57%
  • Ether: 23%
  • NEM / XEM: 6%
  • Dash: 4%
  • ZClassic: 1%
  • Pepecash: 1%
  • Monero: 1%

And these assets are sub-1%: Litecoin LTC, Ethereum Classic ETC, Zcash ZEC, Decred DCR, Emercoin EMC, Counterparty XCP, Aeon AEON, Storjcoin SJCX, Ripple XRP, and Bitshares BTS.

A few weeks ago I sent a summary of investment theses. Thanks to those who gave feedback and asked questions and challenged my thinking.

The crypto market is doing very well. My cautious prediction was $100B USD total market cap by 2020 but we may see that before this year is over! Regardless of whether or not this constitutes a “bubble”, I think the fundamentals of crypto are stronger than ever. Innovation. Experimentation. Talent. Growth in multiple use cases. Software is eating the world, and crypto is eating money.

My investment strategy is currently a mix of:

1. Hold big positions in the leading assets with the strongest fundamentals – eg, BTC and ETH. My target is probably closer to 50% BTC instead of the 57% today

2. Take sizable “flyer” bets on interesting assets that could see breakout price growth in the next 3-6 months – eg, ZCL and Pepecash (I’m writing a separate long essay on Pepecash to clarify my thinking and explain what the hell it’s all about, but it’s perhaps the only asset I actually enjoy following, as opposed to most of the rest in which greed now predominates)

3. Diversify into different use cases of coins and assets because long-term, we don’t know who will win and what use cases will prove popular – Dash for its marketing and self-funding and potential to cross the chasm, NEM for its Asia presence and hybrid of private + public chains and quietly competent development team

I still need to calculate my April returns versus benchmarks and will share that when it’s ready.

Two general interest links for you to read:

“We have the tech of 93 combined with the hype of 99.” – Sergej Kotliar

Cheers!

Kevin

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.