We had the pleasure of sitting down via Zoom with Jim Rogers. We talked about a bunch of stuff, including:
- Bubbles
- Money Printing
- The Pandemic
- When/where/how a crash might happen
- Janet Yellen
- Bitcoin (of course)!
Give it a watch or listen!
What Hath (The First Six Weeks of) 2021 Wrought?
We’re a few weeks past the GameStop Short Squeeze Apocalypse. Bitcoin has gone from $28,000-and-change on New Year’s Eve to north of $40,000. Altcoins seem to be flying off the shelves. Decentralized Finance is also on fire — if you pick the right one, natch — and the “degenerates” might be having their day.
So…what next?
Here’s some potential calm for the coming storm: a few ideas that, while they’re not financial advice and you need to DYOR (Do Your Own Research), could help you successfully hedge against the coming storms.
1. Just Buy and Hold Bitcoin
We’re reminded of a couple of conversations we’ve had recently with this little nugget of advice; both of the convos centered around “how do I get started?”
Bitcoin is…well…Bitcoin. If it’s not the centerpiece of a portfolio, that’s fine; but it’s also the core concept behind every single coin anyone uses. Without it, no crypto.
Ignore the fact that there’s a guy with a Twitter handle of “@russian_market” and somehow he got a blue checkmark — which gives him some sort of authority, right? — and take a look at his Bitcoin prediction for 2021.
Also consider the fact he may be smoking something.
[TIME FOR A CLEARLY MARKED AFFILIATE LINK: Get some BTC, or other crypto, on Coinbase here. We’ll both get a bonus with a qualifying purchase.]
But, if our Russian friend thinks Bitcoin is doing a 5- or 6x this year, shouldn’t we look down the list and…and…
2. Ethereum Is on Fire
If you’ve followed this space for a few years, one of the things you have learned is this: without Ethereum, crypto apps don’t work. In addition to being a currency unto itself — and one that’s trading at around $1800 as of this writing — on pretty much any of the app-centered parts of crypto, you absolutely have to have “gas” to operate. That gas is ETH. Without ETH, no trades on Uniswap, no liquidity pools on any other #DeFi app, and no yield farming to speak of.
Even if you don’t understand any of that previous paragraph — and, let’s face it, most of that is Greek to the everyday Joe — realize this point: Bitcoin’s market cap is inching towards $1T, and BTC is four-and-a-half times that of ETH; ETH is NEARLY TEN TIMES AS LARGE as the next crypto coin (Cardano, ticker of $ADA). Ethereum is big, it’s very important to the crypto economy, and it is not going away.
3a and 3b. #DeFi Building Blocks
We’ve made a few mistakes here — without a “warts and all” approach, we don’t think this site would have lasted, actually; we’d rather you read up on the $50 we blew on some crypto app than invest in it yourself and lose your own money — and a couple of those mistakes are related to two trades we made with Decentralized Finance (“DeFi”) coins that have caught fire.
First, item 3a. Yearn.finance is $YFI and, defying logic (er, “DeFi-ing logic”), had you gotten in on the ground floor — or, more accurately, the basement; only really truly early adopters got this price — you could conceivably have turned a grand into $1.4M.
A more accurate description of the “woulda, shoulda, coulda” factor here is that you may have gotten in on perhaps the first or second floor of this high-rise. Our own experience had us taking a chance (by “taking a chance” that means a hundred bucks or so) on YFI when it was priced at $2000 to $3500. So we’re still doing okay. But…
3b.: Uniswap. $UNI. This beaut was an airdrop. Last year, the UNI team decided that the best way to get users on board with its coin was to gift it to ANY account that had used the platform. The airdrop gave 400 coins (or so, as one of ours got a few more than 400) that were valued at around $3 each. We hodled some, sold some others, and it has turned out nicely, hovering above $20 for most of this week. (TBH, though, the fact we sold some a couple weeks ago does irk us more than a little.)
4. Take a Chance on These?
We added a question mark because — AND AGAIN DO YOUR OWN RESEARCH — you are more likely to lose your entire stake in any of these coins than you are to make mad bank (as the kids say).
If you want a couple ideas, though, here goes:
Sushi ($SUSHI), which forked from Uniswap, has done well this year (currently trading in the low teens).
Dogecoin ($DOGE) is the love of folks like Elon Musk; it’s also projected by the Russian guy up there to go up at least 10x this year.
Kimchi ($KIMCHI) was thought to be dead — and may actually BE dead, in that there doesn’t seem to be any active developers still working on the project; this is called a “Rug Pull” and we explain it a little more in this post — but it is still throwing off triple-digit APY.
N.B. on pools such as KIMCHI: not only are pools like these highly risky, these interest rates will fluctuate wildly; you’re betting that KIMCHI stays stable (it has been ranging from $0.0002 to $0.0004 for the past few months) and that you don’t get totally whacked with growth of the other coin you pool it with. If one of the coins goes way up while the other stays at roughly the same value, you’ll be kinda okay; if one goes up and the other goes way down, you’re going to have some “impermanent loss” from the coin that doesn’t grow. We explain more here:
And A Final Few Notes:
We hope this post gives you a few ideas about how to maximize your investments. We need to share a couple other things here:
- Past performance (DUH) is not indicative of future results.
- DO YOUR OWN RESEARCH.
- None of this is financial, legal, or tax advice.
- Of the coins mentioned above, we own small positions in the following: $BTC, $ETH, $UNI, $YFI, $SUSHI, and $KIMCHI.
Biden Wins, Crypto and DeFi Pop; Will 2021 Be More of the Same?
After a few days of uncertainty, it looks like Joe Biden will be the next President of the United States. What does that possibly mean for the crypto market, and for DeFi (“decentralized finance”)? Let’s dive in just a little and find out.
BTC: Pretty Bullish 7 Days
Whether or not correlation equals causation this week is questionable; the BTC chart from the past seven days is actually quite interesting, though, as once it seemed it was likely going to be Biden and not Trump, the price went up.
A couple of weeks before the election, I asked my friend Von what he thought a Biden win would do for the crypto markets; this is what he said:
At this point, though, the stock market has been fine — most prognosticators had priced in various scenarios and the markets really like the prospect of a Biden administration being held in check by a Republican Senate — and the Fed has held its own (and held interest rates where they are), and the prospects of an economy tanking seem pretty low.
The bullish BTC case, though, may have little to do with the economy writ large (or your 401(k)’s value) and more to do with things like money supply — the Fed still has the money printer; it still goes “Brrrrr” — and whether or not the US Dollar’s days as the world’s reserve currency could be numbered*.
(*By “could be numbered,” it should be noted, that’s a real real tall order that wouldn’t happen overnight and even the most fervent anti-dollar or pro-gold standard folks probably wouldn’t see that in a decade at the least.)
In any event, the numbers below — the 24-hour “sentiment” from CoinGecko and the percentage gains over most of the measured periods, with a real OMG for the 12-month prices — show that BTC can weather the storm of a Trump administration and a coronavirus pandemic and emerge stronger. The question remains whether these trends continue.
What About DeFi?
One of our biggest DeFi holdings is Yearn.Finance ($YFI) and we’ve bragged about it a couple times here, including in this piece: When You Realize You Should Have Bought More. It has had quite the week, actually, dropping sharply and snapping back to life almost as quickly.
If you think of YFI as proxy for all of DeFi, you might think this bodes incredibly well. And you may be right. Or you may be wrong.
Had you bought in at the low and exited at the top — HA! Nobody Did That! — you’d be sitting on an insane profit.
But that’s not the point here and that’s not the point of most of the DeFi tokens like YFI. The point is APY (Annual Percentage Yield) and that’s where you’ll find much more mystery in DeFi.
Are the assets themselves valuable enough? Or are you playing the “yield farming” and “HODL” game, hoping to maximize on, in theory, an asset you buy at $1000 and get a yield of 50% from AND that asset jumps to $2000 or $5000 or $20,000?
And does the Presidency have ANYTHING to do with that at all?
There’s Much More DeFi Mystery
So many questions:
- Will President Biden be pro-innovation in the financial sector?
- Will his administration be interested in digital currency at all?
- Is anything favorable to DeFi immediately assumed to be anti-banking, or anti-big bank?
Bitcoin might be a little easier to figure out, right? BTC is the people’s currency and just maybe it and the US Dollar can coexist. DeFi, though, is much more mysterious; yield farming is new-ish and YFI is a 2020 innovation. It all happens outside of the purview of any government and, despite YFI failing the “Howey Test” and not being considered a security by the SEC (for now, we guess), you would suspect that the opportunity to tax anything that throws off the kinds of profits thrown off by DeFi is looked at by a Democratic administration as potentially lucrative.
Your Guess? As Good As Ours
The point, though, is that we’re onto a new day in crypto and DeFi. While none of this post should be construed as financial advice, perhaps the best way to ride the actual crypto back-and-forth, and the wild mood swings of the days ahead, is to actually get in the game.
Bitcoin has proved itself resilient. DeFi — as reflected by YFI — maybe a little crazier. 2021 could bring much more growth, or it could see huge pullbacks. But you won’t find out until you actually, well, find out.
The SHTF Portfolio*, Part 2
We gave you a couple basic ideas in Part 1, including gold and silver, plus some cash, and — since this is a crypto blog, natch — ETH as your gateway crypto.
Now, in Part 2, time to go really in on crypto to round out your potential portfolio for…well, you know.
This reminder: We’re not responsible for your success or failure. That’s all you. This isn’t individual advice. Past performance isn’t indicative of future results. Bet with your head, not over it. We hope, though, that you succeed.
Portfolio Idea #5: Yes, Virginia, there Is a Bitcoin
You need a little BTC to make sure you have the Grandpa of Crypto. Not a ton, but some. This is where you’re assuming the coin will act as a bit of a hedge, and will move with the broader stock market — which it has done, at least a little — but you’re not banking on a 10x overnight.
You’re doing this for ease of mass usage on places like PayPal, for when people start adopting it.
It’s not our favorite right now, but it’s not to be ignored in a crisis.
Portfolio Idea #6: Join a YFI/ETH Pool on Uniswap
We’ve talked about LPs — “Liquidity Pools” — elsewhere on the blog; this makes a ton of sense as the crypto world morphs into the DeFi — “Decentralized Finance” — world.
Our recommendation here is to have some $YFI and put an equal amount of it and $ETH into a Uniswap pool. While the liquidity here is not where it used to be, you really want to be there because the next Uniswap “airdrop” (more on those in a second) will happen and you need to be using your Metamask account in order to get some sweet, free money. Which brings us to the next item:
Portfolio Idea #7: Get Airdrop Fever
Most of these will suck.
In fact, until Uniswap’s massive airdrop — 400 coins into EACH ETH account you used on their platform — we hadn’t ever seen one that was four figures worth of fun.
The rest may eventually be worthless — I’m looking at you, POW Token — or just a couple bucks here or there. But there are some gems if you’re willing to play around a bit.
Sign up for airdrop alerts from other blogs, check this site for some that we see, and — this is a great tip, in our opinion — get over to Telegram and start poking around.
Keep a spreadsheet and check back periodically on the airdrops’ sites to see if you’ve had any luck.
Portfolio Idea #8: Take a Couple Chances
Here’s where you can get creative, but don’t go crazy. For instance, we have a couple hundred bucks — in October 24 prices — worth of Taco coins, and, should a random small need pop up, we can cash that out and not feel incredibly bad about it.
You’ll want to consider having a few of these types of investments; probably not going to set the world on fire and do a 100x tomorrow, but may hold their value okay.
Some to think about:
- FOOD-named coins (again, why?)
- Coins like Compound ($COMP) and Balancer ($BAL)
- And Crypto.com’s CRO — HERE’S AN AFFILIATE LINK: Crypto.com.
Portfolio Idea #9: A USD “Stablecoin”
The best and easiest of these is DAI. Whether it is technically a “stablecoin” could be debated, but the general idea is to peg it to the US Dollar and it doesn’t fluctuate too much above or below that buck.
(Whether the US Dollar will continue ad infinitum to be the global reserve currency is questionable. But…well, that’s a subject for another day. Also, while you’re here, be sure to read our discussion with Carlos Baeza Negroni, who is building a stablecoin pegged to the Chilean Peso.)
You can get some DAI through this CLEARLY MARKED AFFILIATE LINK to Coinbase.
Scouts’ Motto: Be Prepared
Hey, we all hope that things remain semi-normal, but there’s a chance they won’t.
Consider these ideas to get you started as you prepare for the turbulence ahead.
The SHTF Portfolio*, Part One
If you’ve watched any prepper television shows — you know the ones, where they have a bugout bag and a 1976 Chevy Nova parked somewhere in the wilderness, then they plan on driving across the border and into another country, likely Mexico, but possibly Canada, and you can tell we’ve watched too many of these shows — you are aware of the SHTF acronym.
If you haven’t, let’s just assume it stands for “things get really bad.”
Watching the news, you might think the world is going to heck in a handbasket, but…well, all is not bad, because at least the car insurance ads tell you you can save tons by switching.
We’re here today to give some ideas — not advice, not counsel, see disclaimer below — and maybe these can help you if…well…you know.
This advice is culled from a few places, plus our own crypto experience. YMMV is another acronym and THIS one we can define for ya: “Your Mileage May Vary.”
So we need to tell you we don’t provide investment advice, and your experience may vary, and that we’re not responsible for success or failure. We hope you get rich, but, more importantly, we hope you stay safe and take care of yourselves.
*And…about that asterisk. This may NOT totally be a “portfolio” in the traditional sense. We’re not suggesting retirement money here, we’re suggesting different investments and platforms that can put you in the position to cut your losses when…well…when the SHTF moment happens.
Portfolio Idea #1: Cold, Hard Cash
You need it. If you’re in the USA, that means the greenback. If you’re in another country, your own currency may suffice, but (for now) the greenback is essential.
Recommended: $1000. That’s your emergency fund. Hide it somewhere, don’t tell anyone except the others in your house that need to know.
The inimitable Dave Ramsey recommends this amount as your emergency fund — this is the first of his “baby steps” which can help you get out of debt and right the ship.
However, in a super duper emergency like the one that necessitates the SHTF portfolio, getting out of debt might be the least of your worries.
Portfolio Idea #2: Precious Metals
These are the most fungible when they’re in smaller denominations. Recommended: a few hundred dollars to a few thousand dollars worth. Small units of gold, like 1/10 or 1/5 ounce, are great. Silver bars and coins and rounds — an ounce each — will get you by when the crazies come out. Hey, how much for that bag of groceries? How bout two ounces of silver? Great!
Now, a note about precious metals as an investment: your guess is as good as mine. There are analysts who follow gold and silver, and the stock prices of miners that get the stuff out of the ground; these people will tell you that they can only go up in price because of supply and demand and the inflation of the US Dollar. Great.
There are others, like the inimitable Dave Ramsey (referenced above) who think gold and silver are dumb.
Portfolio Idea #3a: A Coinbase Account
THIS PART INCLUDES A CLEARLY MARKED AFFILIATE LINK: Coinbase Affiliate Link. If you use that link to sign up and buy your crypto, we can both get a bonus after a qualifying purchase.
One reason you want to get on Coinbase if you haven’t already: ease of use. You will need a tool like this to move amounts of your crypto out of their wallets and into an actual bank account.
Another reason: some of their tutorials can pay you money. Here’s a list of a few, and, again, THESE ARE AFFILIATE LINKS:
- EOS tutorial on Coinbase Earn.
- Stellar Lumens (XLM) tutorial on Coinbase Earn.
- Compound (COMP) tutorial on Coinbase Earn.
We’ve used Coinbase for the past couple years and, if you need to move coins lickety-split, it’s one of the best ways to do so.
Portfolio Idea #3b: Crypto.com
HERE’S ANOTHER CLEARLY MARKED AFFILIATE LINK: Crypto.com. Our experience with this platform isn’t as long as ours with Coinbase, but we’ve gotten a decent ROI from a couple things.
One is the staking — which, in this #DeFi economy, is quite profitable, since platforms are paying interest in order to recruit people. You can get a percentage return — ours was about a 30% bump from when we bought in — just by parking your coins on their platform for a few months.
The other profitable angle: staking led to a bonus of $50 into our account, and $50 into the referrer’s account, too. (So yeah you can build a little empire if you want.)
Big, also, is the debit card from Crypto.com. Here’s the Black Card, which is slick. Ours is burgundy, and equally slick but took us less money to get started. It’s authorized by a US-regulated bank.
Portfolio Idea #4: Get Some Ethereum — ETH — Now!
We recommend two things here: a few hundred dollars of Ethereum, and a Metamask wallet.
WHY ETH and not BTC?
Simple: over the past couple years, while Bitcoin has ebbed and flowed, the use case — other than being the big 800-pound gorilla of the crypto universe — has been meh. Ethereum, however, has more of a use case, in our opinion, than XRP, which hoped to displace SWIFT for bank settlements.
Who cares about bank settlements, we think, when all of the #DeFi developments going on in 2020 rely upon ETH to make the transactions.
Sure “gas” prices could be high (that’s the amount of ETH needed to transact), but there are few alternatives that make sense.
Ethereum is still relatively cheap, down 72% from its all-time high of $1444. (That’s after a healthy morning bump to over $400.)
Recommendation: buy some — a few hundred dollars if you can spare that money — and score the Metamask wallet here: Metamask link.
Coming in Part 2…
Next post will look at a few specifics: some random coins, some basics, and some ways to potentially monetize right now if you need to. (And we’ll include ways that link back to the first part…)