The Other Side Of The Coin
Most people involved in Crypto are looking for ways in which they can make money. They endeavour to seek out altcoins with great upside potential, are actively involved in futures or leverage trading, as well as other avenues such as DeFI. This is great and I myself practice all of these approaches but there is another important aspect to making money and that is, not losing money. This of course is the side of the coin that is not given much attention and yet it should receive equal attention. This all falls under a term known as risk management and correctly designing this structure can be the difference between success and complete failure, even after previous successes.
Both failure and success are not permanent states! One can lose everything after a season of tremendous victories, as too can one rise from the ashes into a position of success. It is often said that preserving wealth is just as much hard work as creating it. At the end of the day you need to design and create a portfolio with multiple facets and dynamics at play if you wish to effectively protect and grow your wealth over time. This can sometimes mean that you restrain yourself from potentially massive gains and give yourself over to more modest approaches, at least for a percentage of your portfolio.
All in also means all out if things go against you and this can happen very quickly in the altcoin market. Look how many alts lost 70% of their value in this recent dump that played out within a matter of days. Extend that into a full blown bear market and you are toast!
So How Have I Protected My Portfolio?
Firstly, as you may know, I increased my stablecoin holdings to just under 30% of my portfolio when BTC first hit 50K. I continued to take profits into BUSD and USDC as BTC moved up to 64K. I made my final transition as BTC retraced to the 50K level for the second time. Remember that this was done prior to there being any sign of weakness in the market. This was a strategic plan that was being executed regardless of whether BTC continued to rise or not. If you have enough exposure in the market to make great gains, it is pointless risking it all.
One should always have a stablecoin arsenal. I also put a lot of my BUSD and USDC to work in DeFi and in this way compensate for the monetary expansion that would otherwise cause me to lose ground.
I am a new believer in utilizing stables but with DeFi and even CeFi platforms such as BlockFi and Celsius, it actually becomes a very wise play. This is especially true when a bull market begins to mature, as the top could hit at any time. Obviously, I would not assign such a heavy weighting at the bottom of a bear market, as the opposite dynamic plays out.
One of the other strategies I make use of is passive income. Yes, my favorite topic in the Crypto space. This has always been my biggest play and I am always looking to grow and develop this aspect of my portfolio. So to put this into perspective, if prices dump and the value of my portfolio begins to drop I have these defense mechanisms in place. Firstly, my stables continue to hold value and decrease the market drop substantially for me, as my holdings make up a large percentage of my portfolio. Secondly, I am generating new Crypto every hour of every day, which is entering my portfolio and producing a positive value to counter the negative valuation at play.
If my passive income is strong enough it can actually dilute the losses and keep my portfolio steady and even appreciate. I am not at that point yet but that is where I am headed.
One of my passive plays has been BetFury and recently they announced that their BFG token is soon to be launched on exchanges. Now I mined these tokens in order to earn daily dividends from BetFury on an ongoing basis and now I have a further blessing! All of the tokens that I have mined have now been assigned a valuation of a couple hundred satoshis each. This now contributes further value to my portfolio, bringing increase in a time of general loss. This is what you need to have going on if you want to grow, even when markets are tanking.
Airdrops, staking, DeFi and other passive mechanisms. Daily explosions of value being added to your portfolio will ultimately position you above 95% of market participants and put you in a position to act when others are unable to.
These are my approaches to the market and should not be considered financial advice. Do your own research and enjoy building for your future. All the best Sapphire!
