Nearly everyone who enters the cryptocurrency market is in it for two possible reasons. The first is that they're interested in the technology and how it could change the world for the better. But the more likely reason is that they are in it for financial gains. We have all heard stories about people that got into the cryptocurrency market that went from rags to riches. Completely changing their lives. I will be honest, that is why I initially had interest in this market as well. Viewing it as the best investing opportunity out there. But for every one person that makes it rich in this market, there are far more who lose it all. What is the difference in portfolios between these two people, and what makes a portfolio for champions.
The cryptocurrency market is unlike most markets out there. For some reason, people who are entering this market are hoping, and sometimes expecting to get rich extremely quickly. That isn't a trait that you will often see with newcomers entering stocks, bonds, gold or other markets. There is a market that it reminds me of; and that market is gambling. And that is exactly how I view 99% of the cryptocurrency market. Sure, every once in a rare while, someone will hit the jackpot and get rich. But you're more likely to see the person lose their money, and keep putting in more money to get back to even.
This is exactly how I view the altcoin market. While there are some decent projects out there, I think its safe to say that most of it is junk. People invest in it not for the technology, but because the market cap is low and they expect the price to 100x. If you do get lucky and choose the right coin, it can change your life. But, you have to time it right. You don't want to hold on to that low-cap coin too long, because it will retrace. And you also don't want to sell it too early, missing out on massive profits. Timing the market is a school that most people don't have; I know I don't. So while 0.01% of people may be able to cash out at the perfect time, most people will eventually lose money on this venture. That is why I worry when people choose to have a portfolio that consists only of altcoins; especially the low-cap kind. The cryptocurrency market is already very risky even if you invest in the blue-chip coins. But when you begin going further and further into the altcoin forrest, having a portfolio of 100% altcoins, you begin living on the dangerous side. With that said; I am not disavowing altcoins. In-fact, I have invested in them in the past. I was lucky that a good portion did go up, even though I held on a little too long, and I was able to convert those gains into either bitcoin or ethereum. If you can pull it off, that can become a very valuable venture and a great way to increase your BTC and ETH holdings. But it requires much more attention, focus, and sill as well. You need to be aware that this is a short-term play. If you are purchasing and planning to hold these in your portfolio forever, than you are playing the game wrong.
But what is the portfolio of champions?
Well for me that is easy. It is a portfolio that consists of a majority of bitcoin, also a significant portion of ethereum, and then a tiny portion that you can take risks on. Those risks could be buying into lower-risk altcoins, or taking a gamble on those low-caps that may do a 100x. There will be naysayers about what I view as the best way to form a cryptocurrency portfolio. They will say that Bitcoin and Ethereum won't go up as much as the other coins have the chance to. I fully admit that may be true. My goal isn't to have the highest amount of unrealized gains at one moment in time that will definitely decrease drastically in value, as I feel would happen if I took the first approach listed above. But instead, my goal is to hold onto my profits, and value. Bitcoin is the best place to do that, then with ethereum coming in after that. If you have been paying attention to what is happening in the world recently it is becoming absolutely clear what direction the world is heading towards. Bitcoin will continue to become the legal tender of more and more countries, and in my opinion will become the world reserve currency. While ethereum has higher risk, because it isn't a practically finished product like BTC is. If ETH 2.0 is to come to fruition, then ETH will take over the banking systems and internet around the world. These are the two coins that you need to have and I cannot stress that enough. All the other coins are just noise that have been designed to take your money. The name of this game is to get as much bitcoin as possible. After you have done that, you should strive to accumulate as much ethereum as you can. Out of all of the coins in existence today, 98% of them will fade away, and you will be able to count on two hands the coins that will be used. The others will go to zero. I wouldn't want to hold those coins when that day inevitably comes.
So how about me? Do I follow through on what I preach? This is what my portfolio looks like.
1) Bitcoin 90%
If you have been following my posts for any duration of time you will not be surprised to see that BTC makes up an extremely large portion of my cryptocurrency portfolio. While it's always been large, in the past it wasn't quite this high in terms of percentage. With the price increase, and my success at receiving a large amount of BTC by lending it to places like Celsius and BlockFi, it has rapidly increased those numbers. But I wouldn't have it any other way. Bitcoin is what I believe in the most and have the most conviction in. I view it as my cash savings, and that is only multiplied by my ability to earn a passive income on it. While bitcoin may still feel expensive in the $30,000 range, in the future I expect to see the price at half a million dollars, and then going even further deeper into the future.
2) Ethereum 9.5%
You may be surprised to see that ethereum is only about 9.5% of my portfolio. But let me explain that for my portfolio size, 9.5% is quite a large amount and I'm very satisfied with my position. Along with BTC, I have a lot of confidence in etheruem as well. I view them as the two blue-chip coins that you must own. It also works well in my strategy to grow a passive-income by staking. Although currently I'm doing a combination of both lending and staking. It will be very interesting to see what will happen when EIP-1559 is introduced in July, making ETH supply decrease. I'm expecting that the price will go much further up in the further.
3) Taking Risks 0.5%
This category is a combination of many different areas, but all very important. I am very lucky that I've been able to acquire a nice amount of bitcoin and ethereum and this has allowed me to take on more riskier ventures. Although I must admit I will never take my foot off the gas pedal in acquiring more of both of them. Some of these risks have worked out amazingly well, and some have been duds. Some of the things I did that turned out very well was investing into Cardano 2 years ago, Polkadot last year, Polygon, and I was able to convert those gains into more bitcoin and ethereum. Some other ventures I have done were taking opportunistic loans on btc after massive price dips, and getting into ethereum mining. One investment that didn't work out well for me was investing into ICP, which I eventually took a loss a converted back to bitcoin. You win some, you lose some.
The most successful investors focus on building great portfolios that have strength and will stand the test of time. Focusing on getting rich slowly, rather than quickly. That is my approach. While admittedly I am very far still from what my personal goals are; I have full confidence that I will eventually get there.
How about you? What does your portfolio look like? Is your portfolio built trying to get rich quickly, or is it built for the long-term?
As always, thank you for reading!