Super Sunday – No Crisis Here

Everybody woke up yesterday morning in a state of shock. The market and collapsed and some were saying they’d seen 20% vanish overnight. I remember this well as I had the same experience in early September and for those who despair it will bounce back I promise. In September over the space of about 4 days there was massive drops and I remember calling the first day Wipeout Wednesday as I thought it would only get better. I chose at that moment to hold my nerve and it nearly dropped to my ‘get out and cut my losses stage- which I had already earmarked as being if my portfolio dipped below 60% of its original investment value.

It was the apocalypse, I was caught in the middle of it and it nearly broke me.

Yet here I am eight months later with a completely different story to tell because I had learnt my lesson in September.

So what did I do?

I love StableCoin and I have chosen DAI as my coin of choice because while it is Ethereum based it stakes on Coinbase at 2% which due to the current Covid situation is just above the annual rate of inflation. Got a nice collection of DAI on Celsius too.

I changed my base trading currency from TEZOs to DAI and have become obsessed with DAI acquisition. It is not quite a perfect StableCoin for me because my fiat is GBP so it does fluctuate a bit as the USD and GBP move against each other

What this means is that I play DAI off other currencies and always look to yield more DAI and then to be honest fees are irrelevant so long as the DAI acquired is higher.

Example (I will use USD because the numbers are easier and my own invented - non-existent crypto - ABCx)

I have 100 DAI (100 USD) and I convert it to 100 ABCx at $1 each. Now I wait for the market to increase and let’s say ABCx increases to $1.05 I then convert it back to DAI and get 105 DAI so I end up +5. Coinbase may take a fee for this conversion but so long as it is more than 100 I win. Sometimes I take the profit and drop the rest in for example BitCoin as a long term hodl – it’s profit anyway so its value is almost arbitrary.

All good so far?

So next time I put 100 DAI though the cycle again leaving that additional 5 DAI untouched and staking all the time. I wait until the market conditions are right and this time I might add 14 DAI and then I go again. Once more I only put 100 DAI into the mix and now I have 19 DAI happily staking and holding its value

… and so on.

So in anticipation of such a correction as we saw yesterday I did the same during the recent surge but in the opposite direction with my staking / hodling currencies. I did this for Algorand, TEZOs and Cosmos

How do I mean in the opposite direction?

In principle using ABCx again let’s imagine I have 100 in my portfolio and it surged to $1.50. I then converted that into DAI – for easy figures let’s say 150 DAI and then when the dip comes let’s imagine it dips to $1.25. I now convert most of my DAI back to ABCX

130 DAI = 104 ABCXx

So in terms of the quantities I hold I am now +20 DAI and +4 ABCx

So in doing so I have leveraged gain in both currencies. Of course I may have anticipated a dip for days or even weeks in which case I had to just hold in DAI – where I remind you it is staking and stable so it is not losing value.

So the bottom line is that while my investment amount is quite modest I am

+1.2  ALGORAND (from 50 Algorand = 0.6% growth)

+0.54 TEZOs (from 5 TEZOs = 10.8%)

+ 1.5 COSMOS (from 20 Cosmos = 7.5% growth)

+18.6 DAI (Percentages are irrelevant because it is made up of pure transaction profit not held DAI)

And what is more, as the dip bottomed out, I reverted to my main strategy and turned around some Yearn Finance with another 4 DAI added and a bit of change which converted into 1 more ALGO in just a couple of hours.

My budget is modest and this growth is conservative, but between them all of these investments are worth (price checked at time of writing – 18 April 2021) almost £40 (US$54.79). It is all staking so I can just sit back and watch that Coinbase counter increase in speed and let's not forget that firstly the staking rewards compound and secondly that I also leveraged another £2.92 (US$4) from the margins in my Yearn Transaction.

Not bad for a day that many were describing as a bloodbath. Please learn from the dip like I did in September.

And what is more I turned around immediately what I’d invested in Yearn and woke up to another line of profit in Band.

All in all a prosperous Sunday because I have learnt how to leverage a dip.

As always stay safe and stay well