Metacoin

Covering Bitcoin, the Blockchain, Altcoins, and Fintech

Bitcoin

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.

Chart from CoinGecko, Graphics from Metacoin.co

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.

Wait, what?

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 don’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:

A lovely YouTube video from Dave

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:

  1. Past performance (DUH) is not indicative of future results.
  2. DO YOUR OWN RESEARCH.
  3. None of this is financial, legal, or tax advice.
  4. 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.

Are these things connected?

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:

Doom and gloom?

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.

Huge Mood.

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.

Another Huge Swing.

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.

Balance Portfolio Continues Its Run

We’ve probably said something to the tune of “set it and forget it” for the past four years now. Unless you’re a professional Bitcoin and cryptocurrency trader, you’re likely playing with fire if you try to time the market and get in and out and back in again with the various coins.

So, here’s at least a little evidence that an approach like this *could* potentially work for your portfolio.

Let’s, as they say, go to the videotape, which, as you’ll see, shows a real highlight in the Balance Portfolio…with one of the coins up 245%.

That’s a Spicy Meatball

How we…balanced…the portfolio on 1/1/2020

Background: as opposed to the BRED Portfolio, we created this one to take advantage of the potential for asymmetric gains with a couple of coins that have (in our opinion here at HQ) tremendous potential to pop.

Last month, as you can see in our most-recent post about this portfolio, we benefited from some nice price movement in Bitcoin itself; the largest holding in this hypothetical account. Bitcoin has been stagnant in the past month but OH WOW LOOK at $VET.

When ten percent of your portfolio triples…

The basic idea: have the bulk — in this case, 1/2 — of your holdings in the two biggest coins, Bitcoin and Ethereum, and have most of the rest in coins that could have a pop. (The exception: $PAXG, which is there as a hedge.)

VeChain: An Asymmetric Jump

We follow quite a few investment newsletters and people who tweet like they know what they’re talking about. One theme that pretty much all of them follow is that the best way to make a mint is to make “asymmetric” bets and, hopefully, one of them pays off big time.

It’s not uncommon in the venture capital world, too: VC firms will have 25 portfolio companies with the hope that 1 out of the 25 has a 100,000% rise to make up for the 15 that fail and the 9 that are just moderately successful.

VeChain has the signs of a coin that COULD have an asymmetric rise and reach insane heights. It has the backing of corporate types, or, in their words, the solution is “driven by enterprise adoption.” That means things like this…

Consumer Confidence Index

…and it also means the application is potentially used in a variety of other ways, like helping track carbon emissions or driving autonomous cars.

This MAY explain this particular coin’s rise: people who are looking for the next Bitcoin or the next Ethereum and fear they may be too late to the party will often start looking for coins that fit certain criteria — call it, partially, the “Robinhood effect” — like a sub-$0.01 price, which is where VET was earlier this year. (One of the newsletters was specifically recommending a certain coin that had a sub-penny price and corporate relationships late last year; deduction brought us to VeChain as a result.)

How to Get Involved?

We need to stress that we don’t provide investment advice, you should only invest what you can afford to lose, and we’re not responsible for wins or losses. We hope you have plenty of wins, though.

Two ways we’ve recommended and we’ll provide CLEARLY MARKED AFFILIATE LINKS HERE:

  1. Sign up for a Coinbase account. You can get a bonus with qualifying purchase and we’d get one, too. *Note that $VET is not available on Coinbase just yet. To get that one in particular, you’ll need to…
  2. Sign up for a Crypto.com account. The bonus is potentially richer but the qualifying purchases are larger, too.

Happy Investing!

Two Automatic Portfolios: Which One’s Better?

Ages ago, we created a crypto investment plan we called the “BRED Portfolio.” Then, this year, we added a different one that we called the “Balance Portfolio.” It’s time again to look at the tale of the tape: which one is performing better so far?

BRED: The OG of “Set it and forget it”

Here, as background, is what it looked like at the beginning of 2020:

Each bucket gets $2500

Flash forward to this morning and here is the YTD scorecard:

Nearly 48% YTD isn’t bad.

Of note when looking at the above percentages: since we factored in the forks at the beginning of the year (with the value of each “class” including a percentage based on the January 1 price), the percentages for the BTC and ETH class on the whole is a little lower than the percentage growth for the “big guns” in the class. BTC is up 32.54% as a class; ETH up 79.50%.

This leads us to ask whether or not we should incorporate the forks next year. We’ll keep an eye on that.

The BRED Portfolio is designed to be a hedge, of sorts; if BTC and XRP don’t move in lockstep with each other, that’s a good thing for you. They haven’t so far this year.

Bottom-lining this for ya: if you had put $10,000 into this portfolio at the beginning of the year, you’d have close to $15,000 today. So how does that compare to the “Balance” portfolio?

Balance 2020: Not too shabby, either

Before we look at the YTD performance here, let’s see how we set this up to start the year:

2020 Crypto Balance Portfolio
How we’d allocate a balanced portfolio in the new year.

With half with big guns BTC and ETH (no forks) and the other half in five different assets that provide an interesting variety, this portfolio is designed to be more of a hedge than the BRED portfolio.

And…how is it actually doing?

Balance lags, but not by much…

N.B. We’re in love with VET; we think VeChain is inking the right kinds of “Blockchain as a Service” deals and our own personal crypto holdings have a decent chunk in VET.

PAX Gold is another interesting one, in that it aims to mirror the price of gold. Gold isn’t having a moment, yet, but 15% YTD is, again, nothing to sneeze at.

Reminder: none of what you find here is meant to be investment advice. Do Your Own Research, consult with professionals and, especially with crypto, don’t invest more than you are prepared to lose.

AFFILIATE LINK: If you’re interested in getting started with crypto, one really compelling way right now is with Crypto.com. They’re offering cash back on a crypto-based debit card with certain qualifying purchases.

The Blind Squirrel Crypto Portfolio

“In these uncertain times, count on Bitcoin. It’s there for you.”

Well, if Bitcoin could advertise during the pandemic, it would probably say something like that. It would also be total BS: nobody knows where the price of it, and its crypto brethren, will be tomorrow — when the unprecedented unemployment numbers send another jolt into the market –or a year from now, or at the end of 2021.

One of our goals here at Metacoin HQ is to at least introduce you to some of the coins that can potentially help diversify your portfolio. This is why we created something called the BRED portfolio in 2017, and why this year we came up with another idea: the Crypto Balance Portfolio.

You can’t buy #Tomatocoin yet.

Let’s Check in on the Balance Portfolio

If you’ve heard the phrase “every once in a while, a blind squirrel finds a nut,” you’ll see why we gave this blog post its name. A little dart throwing could have yielded similar results; as long as you have some Bitcoin in your portfolio, you’ll probably do okay.

A 25.59% gain.

When we launched this portfolio, it was weighted as follows:

  • 30% Bitcoin
  • 20% Ethereum
  • 10% each of Ripple’s XRP, MCO, EOS, VeChain, and PAX Gold.

Turns out that this weighting helped us quite a bit, since half of the portfolio was invested in assets that appreciated almost 30% (Bitcoin) and 59% (Ethereum). And that helped make up for some of the “meh” performance, like that of VET (VeChain), which is the only loser so far in 2020.

What’s Next?

Every four years, Bitcoin does something called “halving:” cutting in half the reward given to miners. This is scheduled for May 11 — you can look at a nifty countdown clock here — and the block reward drops to 6.25 bitcoins.

So that means what? Good question: some people think the current price factors in that reward, while others think that the supply and demand equation can only mean that, with fewer bitcoins available over time, we’re strapping in for a rocket ride.

The answer is probably somewhere in the middle: volatility, followed by a bull market, followed by more volatility.

In other words, maybe a balanced portfolio can help you hedge your bets.

NOTE: This isn’t investment advice, do your own research, and we’re not responsible for your success or failure.

FINALLY…

Here’s a CLEARLY MARKED AFFILIATE LINK: if you want to pick up some coins, you can use our link at Crypto.com or Coinbase and we’ll both get compensated with a qualifying purchase.