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Nov 08 2020

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.

Written by David Van de Walle · Categorized: Bitcoin, Yearn Finance · Tagged: Biden, Crypto President

Jul 16 2020

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!

Written by David Van de Walle · Categorized: Bitcoin, PAX Gold, VeChain

Jun 17 2020

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.

Written by David Van de Walle · Categorized: Bitcoin, BRED, Portfolio

May 07 2020

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.

Written by David Van de Walle · Categorized: Bitcoin, Coinbase, Crypto.com, Ethereum, PAX Gold · Tagged: balance

Apr 26 2020

Checking in on the BRED Portfolio

If you want an answer to the volatility in the financial markets, is it possible that the BRED Portfolio — our 2017 combination of Bitcoin, (Ripple’s) XRP, Ethereum, and Dash — could be just the thing?

Well, maybe and maybe not. However, if you are looking for a hedge against a big chunk of other assets, maybe BRED is the answer to your questions. Let’s take a look at how it is faring in 2020, how a couple other things are faring, as well as how BRED would have fared if you had bought in 2017 and left it alone. (The Ultimate HODLer Portfolio.)

First, Here’s the 2020 BRED Portfolio This Morning

A decent return, no?

You would have a tough time to find a YTD asset class with a 42.67 percent growth so far this year. Right?

A quick Google search yields this result, where the US Long Treasury Index yields the best result. (There’s a feeble attempt at a yield pun in that sentence, since it’s an index that tracks the yield of US Treasurys.) 20-plus percent for that one.

From Vanguard.com

What about precious metals? Didn’t they do okay?

Answer? No.

Remind me to further study the palladium market later.

TL;DR — Bitcoin and its Ilk Win So Far in 2020

Whether or not it’s the ultimate Ron Popeil portfolio — “Set It and Forget It” — remains to be seen. But you could have done a heck of a lot worse with other assets in 2020.

Which lead us to the question about the OGs, the ones who have HODLed their BTC (and ETH, XRP, and DASH) and are just kicking back. How would they have done?

Wow…

This is a 16-bagger.

Well this is something to behold. (Not that you can find anyone who bought Bitcoin in early 2017 AND held it AND isn’t a public Bitcoin bull AND would actually tell you that they’ve bought and held.)

So there you have it…if you’re not a day trader and maybe an investor and have some cash to set aside, a portfolio that you pretty much ignore might do the trick.

Of course, we should tell you that you’re on your own and we aren’t responsible for your successes or failures.

Happy investing!

Written by David Van de Walle · Categorized: Bitcoin, Dash, Ethereum, Ripple, XRP · Tagged: BRED 2020

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