Fleshing Out My Crypto Investment Strategy

Crypto Strategy

By now, it’s no secret to anyone that crypto investing can be a pretty divisive topic.

On one end of the spectrum, you’ve got the skeptics.  For them, crypto is nothing but a giant scam, long overdue for a spectacular collapse.  It’s just a matter of time.

On the very opposite end, there are the zealots.  All-in on the crypto bandwagon!  Ditch your stocks, load up on meme coins, and wait to get rich.  Wgmi!

Being a pragmatic type by nature, I find myself somewhere in the middle.  Formerly a skeptic, I am now convinced there are good reasons to at least pay attention to crypto.

At the same time, I am extremely mindful of the risks involved.  Many of the coins and tokens out there will go to zero at some point.

Some are just outright scams.  Others will get disintermediated, blown out of the water by an even better technology and business model.

Many readers here seem to agree.  As a matter of fact, my piece on Ethereum has quickly become one of the most-read and commented on posts in this blog’s history.  And reading through the comments was reassuring in itself – because most people do realize we live in the real world, not a fairy tale with infinite yet risk-free returns.

Yes, crypto offers higher returns – but they come at a price of significantly higher risk, including the risk of losing your entire principal.

If you are in it for the long haul, you better think long and hard about your investing strategy in what is a nascent, highly volatile asset class.

In today’s post, let’s cover off a couple of key questions any sensible (read: non-speculative) investor should be asking themselves when it comes to crypto.

Off we go.

Figuring Out The Right Allocation

So just how much of your hard-earned money should you allocate to crypto?

Well, there are two ways to go about it.

The first one is to treat crypto as yet another investable asset class.  That means putting it alongside equities, bonds, commodities, and real estate.

You then proceed to construct a portfolio that mirrors the proportion of each investable asset in the global “pool” of investable assets.

To quantify it, consider that crypto is now a c.$2 trillion asset class, while global investable assets are around $250 trillion.  Hence, the “right” allocation is somewhere around 1%.

There is a big problem with the above logic, however.  For example, the global bond market is about twice the size of the stock market.  That doesn’t mean you should hold twice as much in bonds as you would in equities.

Quite the contrary, especially if you want to get rich.

Bonds vs stocks

Ditto for commodities.  Some people love them.  I personally have an allergy to non-productive assets that actually incur storage costs.  As an aside, the non-productive part is why I prefer Ether to Bitcoin, though I am sure I’ll take some heat for this in the comments!

The second way to determine your crypto allocation is to pick a % that won’t really make a difference if your investment goes to zero – but will have a big impact if you 10x your money.

Based on that metric, somewhere between 2% and 5% could be the right number.

A loss won’t be catastrophic.  A 10x gain will lift your overall net worth by anywhere from 20% to 50%.

Somewhat counterintuitively, younger individuals with lower net worth can actually afford a higher allocation to crypto.

If you have a $50k net worth and are saving $25k a year, even a hefty 50% allocation won’t kill you.  Should things go south, you’ll make up for it in 12 months.

Equally, for someone with a $3m net worth trying to live off her portfolio, putting $150k into crypto might be a bridge too far.  And even if you are not living off your portfolio (yet), putting $150k in a highly volatile asset class can be tough.  It certainly would be for me.

In other words, treat the 2 – 5% range as a helpful starting point – but make sure to adjust for your circumstances.

By the way, for some people, the right answer will be 0% – and that’s perfectly fine.  Nothing wrong with waiting things out until there’s a bit more maturity in the ecosystem.  We are still in the early days here.

The Entry Strategy

Let’s say you picked 5% as the right allocation.  The next logical question is – how do you actually get in?  Go in guns blazing, or slowly buy your way in over the coming months and years?

I’ve previously written about lump-sum investing in the stock market.  Theoretically, it’s the right way to go – but pragmatically it is way too risky, especially when significant amounts of money are involved.

There’s always a chance you will click “Buy” just before a nasty correction, which wipes out 20% – 50% of your investment.

If anything, that argument is amplified by crypto.  Sure, it’s tough to sit on the sidelines while prices are constantly rising.  Equally, we may well be close to the top of the current cycle, with yet another “crypto winter” right around the corner.

Bitcoin crashes

Do you really want to put your entire allocation to work in one go, only to see your portfolio lose 80% of its value overnight?  If that were to happen, you’d need a 500% return just to break even.  Not impossible (this is crypto) but can take a heck of a long time.

The other reason you don’t want to go all-in is that the entire ecosystem continues to evolve.  It used to be all about Bitcoin.  Then you had Ether.  Now you have Solana and a host of other layer 1 blockchains – plus a myriad of other options like layer 2 protocols, DeFi protocols, gaming assets, etc.

Slowly deploying your crypto “pot” allows you to form an opinion on some of the emerging technologies in the space and to tweak your allocation appropriately – without incurring excessive rebalancing costs.

Which conveniently brings us to the question of the day:

What Crypto Assets Should You Buy?

Well, say hello to the million dollar coin question.

As I mentioned above, at some point it was a very easy question to answer (hello Bitcoin) – until it wasn’t.  And things are only going to get more complex going forward.

The bottom line is that it’s time-consuming enough to form a proper investment thesis on any crypto asset.  Then, you’ve got to stay on top of everything that impacts the value of your investment.

How is the technical evolution coming along?  What is the competition doing?  Are there any tectonic landscape changes that will render your investment worthless?

It’s a never-ending list of questions – which you now need to multiply by the tens and hundreds of investment opportunities across the blockchain space.  On top of that, you also need to be convinced that your analysis will prove right in the end.

Inevitably, it all segways into active investing territory.  One could build an argument that in crypto, the markets are less efficient.  Thus, there’s far more room to generate alpha (i.e. market outperformance).

Perhaps – but what gives you the confidence you can do better than someone who lives and breathes the space 24 hours a day – and has been doing so for years?

The problem is that passive investing isn’t really an option either.

Yes, there are passive investments out there like C20 and KR1 – but they are far from perfect.

More than 10% of C20 is comprised of highly speculative assets like Dogecoin and Shiba Inu.  I don’t know about you, but I feel mightily uncomfortable buying a fund in which 10% is bound to go to zero at some point.

C20 holdings:

C20 components

KR1 is a slightly different beast, being more of a listed venture capital firm.

It may or may not be well managed.  It may or may not have access to the best investments (there’s a number of other, deep-pocketed players in the space).  But the share price, which has only moved up 16% since it listed, is hardly one that will knock your socks off.

KR1 share price

Make no mistake – once there’s a truly diversified vehicle that doesn’t hold speculative assets and charges reasonable fees, I will be one of the first people to sign up.  But until then, I have decided to stick with a handful of L1 solutions that I have conviction on.

Ether – because I believe it will become one of the key backbones of the DeFi ecosystem.

Solana – because I think the blockchain space is not a monopoly and Solana offers a great alternative to Ethereum.

Bitcoin – well, this is a tricky one.  On one hand, I wouldn’t hold gold – for reasons described above.  On the other hand, plenty of investors love gold.  It’s only natural that in a digital-first society, investors will hold digital gold.

If that thesis pans out, I think there’s plenty of upside potential for Bitcoin.  That being said, it only represents c.20% of my overall crypto holdings today – and that number will continue to decline.

The Journey So Far

Because I am a big believer in transparency (and putting my money where my mouth is), let me share where I am coming out on the questions above.

I first bought some Bitcoin and Ether in late June / early July.  Overall, I put about $4.5k to work, taking advantage of the depressed valuations.

Then, in late August I bought about $2.5k worth of Solana.  That investment doubled in what felt like days.  Last time I checked Coinbase, the value of my “summer” crypto investments has grown to $15k.  Feels good but frankly somewhat irrelevant in the context of the overall portfolio – and I am also mindful that the whole thing can go to zero in minutes.

Then I took a pause – things were just too hectic at work.  But as of November, I started buying around $2k worth of crypto a month.  For the time being, it’s evenly split between Ether and Solana.  However, I may diversify into additional assets once I do my homework (FTX is high up on the list, but there are others).

In terms of overall allocation, I’ve settled at 2% of my net worth.  Working my way up there will take a long time – and I am perfectly happy with that.

Crypto and blockchain will need years and decades to live up to their full potential.  If they do, I’ll be pretty happy with the outcome.  If not, I won’t be (materially) worse for it.

At the end of the day, it’s the best outcome an investor could ask for.

As always, thank you for reading – and happy (crypto) investing!

About Banker On Fire

Enjoyed this post?

Then you may want to sign up for our exclusive updates, delivered straight to your inbox.

You can also follow me on Twitter or Facebook, or share the post using the buttons above.

Banker On FIRE is an M&A (mergers and acquisitions) investment banker. I am passionate about capital markets, behavioural economics, financial independence, and living the best life possible.

Find out more about me and this blog here.

If you are new to investing, here is a good place to start.

For advertising opportunities, please send an email to bankeronfire at gmail dot com

45 thoughts on “Fleshing Out My Crypto Investment Strategy”

  1. Hi Damian,
    This is indeed a very apt article of what I’ve been personally advocating to my peers (albeit I go 5-10% as we fall in the <50k NW range).

    It's more interesting to see your belief in SOL apart from the large cap BTC and ETH, but I was surprised to hear you holding your assets in Coinbase rather than 'cold stage' wallets such as Trezor or Ledger.

    I'd also agree with your statement of a landscape that changes by the day with interesting projects all over the place and the idea/concepts of DAOs which add another layer to crypto and projects like KlimaDAO is one that I'm personally looking into for my personal 'ethical bias'.

    I'd love to get your opinion (not advice!) on projects such as MATIC (crypto coin), the idea of 'staking' within DeFi and KlimaDAO as they seem very interesting in the near future (if not a scam LOL).

    Thanks once again for an actual breakdown of a 'non-speculative' view at crypto, and finally a link I can share with others to resonate with my own thoughts!


    1. Cheers Jack.

      You are spot on re: storage. It’s on the to-do list but that list is mightily long as you can imagine, so I haven’t gotten to it yet. For now, I hold crypto through Coinbase and lately Kraken (lower fees) but will ultimately transfer to a cold wallet.

      Some thoughts on staking below, but I might well do a separate post on it at some point. I think Matic is interesting given it helps scale the Ethereum network, but I haven’t spent too much time on it to be honest. Haven’t yet come across Klima Dao but will take a look when I have a chance.

  2. Thank you for the insight and honesty on your current thinking on crypto. I myself have not yet made the jump but increasingly am considering a basket outside the more traditional equities / real estate. I am thinking for a little in the crowd funding / private company domain though also keen to get your thoughts on this BoF.

    If anything will also mitigate any feelings of FOMO!

    1. Thanks KoF.

      My initial interest in crypto was related to the way it might disrupt the finance industry and ultimately impact me financially. However, once I started taking a a closer look, I realized there’s more to crypto / blockchain than just the “twitter bro hype” you often see out there.

      I’d love to play in the private fundraising space but the problem is I simply don’t know the space well enough to pass judgment on all the business models that are springing up out there.

  3. Great article and very sensible approach to crypto investing. I (30y, 100k NW) have settled for a 5% allocation (BTC, ETH, SOL) and I am currently using a Crypto.com credit card for all my purchases (2-3% cashback in crypto).
    I was wondering what are your thoughts on staking stable coins. I have a couple thousand euros of USDC currently staking at 10% p.a. and it’s hard to believe how good these rates are for a supposedly non-volatile asset.

    1. Thanks Luke. See my response to Bb re: staking. I agree the rates look great but my concern is that staking isn’t as risk-free as people make it out to be…

  4. Hi. Another great article. I think the advice about allocation amounts is spot on… rebalancing is something that needs a bit of consideration too… I started with ~1% allocation and although I’ve taken some profit the value is way above that now. Logically I guess I should sell down more and rebalance (and rebalance within the coin portfolio) but I’ve just let things run… a little mental accounting going on – I guess deep down I still see it as a punt rather than an investment.
    Your comment re c20 is fair… I wanted to diversify away from just BTC/ETH and so after buying a few assets (SOL, ADA, ELGD) directly I settled on using C20… it’s not ideal but it does simplify and there’s a lot to be said for that (in particular re tax…)
    I guess the final thing that’s worth noting is that I think there is merit in staking… I’ve started to dip my toe in here but am somewhat constrained by tax implications… if you are building a portfolio now (and hence dont have significant uncrystalised gains that act as friction on activity) then an allocation of your portfolio to staking/liquidity provision seems reasonable – perhaps 20% of holdings across a few venues?

    1. Thanks Bb.

      So staking is something I struggle with to be honest.

      I see the merit of putting your coins to work. If you have conviction on ETH or SOL and will hold them anyway for a long time, might as well stake, right?

      However, what I am not clear on is what happens to your staked coins if the validator misbehaves and has his stake slashed? By default, that means staking has a risk associated with it and that APY no longer looks as attractive.

      The other question is whether you can stake from a cold wallet. I suspect not, which means you are also incurring platform risk.

      Would love to hear your thoughts on the above (and perhaps it’s a topic for a dedicated post in itself!)

      1. Yeah, there’s a lot of complexity and so all the DYOR/usual I’m not an expert caveats apply… a few thoughts:
        – There are a few different mechanisms of earning yield from what I can tell (1) providing liquidity (2) staking directly (3) staking via a proxy
        – I think the case for all of them is similar – as you say “if I’m holding long term, let’s earn something”
        – There are loads of complexities re tax – staking/providing liquidity may (and for small holders will almost certainly) trigger a crystalisation; income needs to be declared (but may be a captial gain under certain circumstances). Record keeping very important. (This is probably the point where I should make my perrenial point that I am massively narked at our financial regulation in UK – it really ought to be possible to buy a fund that holds the underlyings and manages yield generation and we just need to hold a single instrument)
        – There are additional risks depending on the mechanism for staking/liquidity provision. Primarily counterparty (your point re slashing) but also liquidity (when you get in to things like swapping ether for stEther)
        – There are some cold wallet integrations that ease some of the process – you can hold Polkadot and then nominate it and they also integrate with lido for stEth (the comments above re record keeping and tax implications apply)

        Like much in this space 0 there is both risk and opportunity… I;ve ended up staking and providing liquidity with a small portion of the portfolio; partly to boost returns, partly as an academic exercise and partly so I am familiar with the mechanics such that I can judge in future whether to increase this portion (which will likely be contingent on concerns re cpty risk, tax implications etc abating).

        1. @Bb

          Thank you – great explanation. I may give it a shot for a similar reason – there simply isn’t any better way to learn than by doing

          As far as regulation goes, I am also quite miffed you can’t hold some of these instruments in your ISAs. On one hand, I get it – you don’t want people risking (and losing) their retirement savings.

          On the other hand, the government is being cute as always – unhelpful re: crypto in general but more than happy to tax the gains!

      2. Depending on the coins, you can stake without relying on exchanges and can do this from your cold wallet: eg ledger & Trezor.

        (You can stake for ETH via Lido & SOL via Solflare)

        You can review the Validators past performance to make a judgement re:risk of slashing. Pick one with higher availability

        I think it’s pretty sensible in a buy & Hold strategy.

        One of the downsides is being able to extract if you want to take profits, as some staking pools have lock in periods

        1. You need to be really careful to make sure you understand the tax and risk position. Staking ETH via Lido swaps ETH for stETH which is a cgt disposal and you hold stETH not ETH so have a different risk position.

          1. Banker On FIRE

            Very interesting points on both counts.

            Think staking will rise up in prominence (though I wouldn’t call it risk free given slashing is a possibility, albeit it low likelihood).

            Can imagine tracking the tax position with deemed disposals can be a doozy.

  5. Hi Damian – another well presented and thought through article – thanks.

    As a 58M nearing retirement, I see crypto as a very small part of my portfolio that I’ll use some of my fun money to experiment with.

    I too recently dipped my toe in the water with an initial £2k split 50:50 BTC and ETH. I plan to monitor through to early spring before deciding whether to drip feed further or not. My only remaining investment this side of Christmas will be £1k of SOL.

    I’ve chosen to invest via eToro and would welcome any feedback fro you or your readers on the pros & cons of this app. My understanding is that although I don’t directly own the crypto, the app allows me to participate in the pros and cons of investing in crypto – no downsides as I understand it.

    Congrats on being a top personal finance blogger!

    Warm wishes,


    1. Thanks a lot for the kind words David!

      I think it’s a bit like playing poker, where the game changes once you’ve got some real skin (i.e. money) in the game as opposed to playing with fake chips. Putting some money to work in crypto forces me to do the right level of research and really flesh out my investment thesis.

      I think holding crypto through any big exchange has some risks related to security (i.e. someone can hack into the exchange and steal your coins). However, I haven’t yet gotten around to transferring my crypto to a cold wallet and hold it in Coinbase / Kraken. As amounts involved grow, I will likely transfer it to a cold wallet like Trezor or Ledger.

  6. This was a great read and I really like the idea of getting some exposure.

    My main issue is that I’ve not got enough disposable income to fully utilise pension / ISA allowances, and it feels a bit counterintuitive to be investing in taxable assets outside of these and foregoing the tax advantages space.

    I wish there was a decent way to get exposure within these wrappers, but as of yet I’ve not found anything!

    1. Thanks JP

      As far as I know, there isn’t any way to buy crypto within the pension / ISA wrappers. See my comment to Bb above.

      That being said, the combined pension / ISA allowance is pretty hefty (especially when you consider pension carryforwards). You don’t necessarily want to delay dabbling in crypto (especially with some nominal amounts) until you hit that bar…

  7. Thank you for another outstanding article. I have been there and done it when it comes to crypto – my 10% turned into 80% of my portfolio, and my issue has been getting this back down to a sensible ratio. I will continue to keep a large chunk of crypto though, as I seem to have a knack of researching the good ones and holding for the long term (and never trading).

    If you are going to seriously look into staking, you need to research the highly secure Defi crypto know as HEX, which launched as a complete product.

    The average APY is 37% (paid in Hex), there is no counter party risk (which cannot be said for other crypto staking platforms) and has perfect flawless 100% up time since launch.

    I could go on and on.. but I’ll finish with a quote from the man himself.

    “HEX was delayed almost a year to get security right, which is why it has 3 Audits; 2 Security Audits, 1 Economics Audit. HEX has no admin keys. No off switch. No pause switch. It’s fully autonomous.
    If HEX.com goes offline, I die, the system continues to work fine. It is unstoppable: The code is on the blockchain. You run it. You mint your own rewards. That’s it.” –Richard Heart, HEX Inventor

    1. I meant to say – I will continue to keep a large amount of crypto though (perhaps 30% of my portfolio), as I see a bright future for crypto and I don’t want to be left behind.

      1. Im pleased that you have done well with hex and know a couple of people that have made “retire now” money with it but I think it is reasonable to note that Richard Heart has a slightly interesting cv

        1. RH is indeed a colorful character with an interesting past. Personally I like his no-nonsense, no BS approach, but he could be a bit over the top for some.

          Just to note, I am not a hex maximalist and a large part of my gains come from other coins (Eth, chainlink, solana, etc.), but staking was mentioned elsewhere in the comments and not including hex in this conversation would be criminal. Most (if not all?) other staking coins involve giving over your admin keys and have counter party risk. Not something I would be comfortable doing.

          1. Thanks Jud – great to hear about your success in crypto and do appreciate the constructive comment.

            Thanks to you, I did spend some time looking at Hex. The biggest question I have, which is more conceptual in nature, is how can someone offer APYs of 35%+ on an ongoing basis. I am sure we can all agree that there isn’t any economic logic here, other than the fact that Hex stakers are taking on price risk of the underlying (kind of like buying a bond that yields 40% but has a significant chance of being defaulted on)

            Would love to hear your thoughts on this. It’s an earnest comment as I fully appreciate you’ve spent far more time on the topic than I did.

  8. Thanks for another informative post on this topic. I fear the scalability (and environmental) problems of BTC and ETH may limit their future growth. I have a position in Kadena (KDA) which solves these problems and is backed by ex-JPM guys.

    1. So ETH is looking to solve the environmental issues through a switch to PoS. As far as scalability, they are implementing sharding + there are layer 2 solutions (Polygon) that look to enhance scalability. It’s a very sensible observation though – all of the changes above are not without risk and could impact both ETH’s price and its long term success as a platform.

      Agree with you on BTC, hence my new allocations are going to ETH / Solana. That being said, I think BTC may well figure out a way to reduce the environmental footprint. Amazing things can happen when there’s a lot of money at stake!

      1. Hi BoF,
        I know am coming back to an old one, but I remember you brought up SOL in one of these comments and wanted to return and ask if you view of SOL has changed with recent events such as the ‘DDoS’ attack in the past week and the fact that this may continually plague the project going forward as Validators within SOL (running on a Proof of History model) are ‘published’ in advance consequently allowing for bad people to target validators in advance and compromise the blockchain?

        Apparently the SOL network has ‘gone down’ several times in the past year (at least twice) making me quite concerned about the project (not that I had any skin in SOL to begin with).

        Would appreciate your generic thoughts on this (if any).

        1. Yes – and they also had a significant network slowdown last week.

          So the way I think about it is that all projects like ETH / SOL and many others are fundamentally VERY early stage tech plays. As always, there’s execution / technological risk here (plus a host of other risks). Chances are, very few of the current projects will exist in 10 years (just like few companies from the 90s survived into late 00s).

          That risk is the very reason the potential returns are so large. Too many people are misguided about how risky crypto / blockchain investments actually are…

  9. If you’re in the UK there is no great answer

    We can’t (any more) buy ETF/ETN products on underlying crypto.

    You can buy proxies – miners, investment trusts, microstrategy…. there’s big valuation risk here IMHO

    This is pretty frustrating but I’d suggest you try not to let the tax tail wag the allocation dog

  10. Sensible strategy. Just one point I think KR1 performance since listing is a bit higher (% price change since listing: 6788.89%) per https://www.aquis.eu/aquis-stock-exchange/member?securityidaqse=KR1
    admittedly the recent performance has been sluggish of late especially against a context of its main coins performing well.

    More broadly with crypto there are a few unique/interesting aspects I have found from a personal investment point of view

    1. When a small allocation grows to a large allocation – do you rebalance out of crypto/into other coins

    2. Even with a smaller portfolio the volatility of the underlying does tend to grab your attention and pull you further down the crypto rabbit hole

    3. Understanding what duration trades you are making – 1w, 1m, 6m, 2y. Seeing 1week 10x moves is unnatural and fomo inducing and it can be tempting to start allocating a % of the portfolio to shorter time span trades

    Balancing the opportunity cost of not being in crypto vs the endless number of coins and hype whilst keeping on top of protocol news and keeping in mind tax implications is a tricky mix!

    1. Thanks AC and you are right on KR1. Seems that Google Finance only shows the share price since July and not since inception.

      Clearly 6800% in a year is beyond impressive though interesting there isn’t any significant correlation with the crypto meltdown in May / June and the subsequent rally. More broadly, am surprised that the share price has been flat / declining since April.

      And yes, agree with all the points you are raising. For the time being, I’m tempted to let things run as want to avoid complexity around taxes etc. But I could be singing a different tune if crypto grew to 80% of my net worth, like in Jud’s case above!

  11. In reply to your comment on how a product (HEX) can offer such a high interest rate on an ongoing basis:

    The short answer is that the total allocated supply of HEX inflates by a maximum of 3.69% per year and this inflation is credited daily ONLY to stakers. I believe only around 10% of Hex holders have staked their coins, which means they get all of the interest. Also, the interest is calculated based on the amount staked and the stake term length – bigger and longer yields higher interest rates. If you stake a small amount for a short amount of time, your interest earned will be much less than the average.

    Also worth a mention – the penalties for ending a stake early are also distributed to the stakers (and the origin address), which also adds to the amount of hex earned.

    Please check out this link for lots more detail: https://hexicans.info/interest/

    1. Thanks Jud – very helpful, and consistent with the research I’ve done.

      Essentially this means there’s value leakage from the 90% or so of non-stakers (whose stake is diluted over time) vs the stakers.

      Nifty concept but one can’t help but wonder how sustainable.

  12. I’d never claim to be an expert, but I have been in the game long enough to throw around some ideas of what to look for when investing in crypto (the first crypto I ever bought was Etheruem at around $40).

    1) Does the project have a top tier dev team and/or founder with a proven track record? Always look for quality and don’t jump in on the latest fad coin.
    2) Does it have an active, vibrant community?
    3) Does the project have product market fit? Is there a demand for it? Does it have a unique feature or does it do things better/faster/cheaper than other crypto? Has it been surpassed by other crypto?
    4) Does it have a good brand and logo? Obvious perhaps, but often overlooked. Check out the website. Does it look professional?
    5) Is it a blockchain platform? It’s usually (although not always) best to invest in a (good) blockchain platform itself rather than coins that runs on that platform. For example – ERC20’s come and go, but it’s a pretty good bet that the Ethereum blockchain is here to stay.
    6) Is it a functional product? There are too many coins that over promise on features and never deliver. Look for projects that function as intended at launch.
    7) Do not be tempted to trade. Think of it as a long term investment. Find quality and hold it for the long term. If I’m not wrong (don’t quote me), nobody has ever lost money on Bitcoin that has held for over 3 years.
    8) Knowing your risk tolerance will help you choose which crypto to buy. Generally, the lower down on the coin ranking sites your coin is, the higher the risk (and higher the upside potential). A sensible approach might look something like having 100% of your portfolio in the top 10 coins. Adjust this based on your risk tolerance.

    My current personal investment strategy is to hold very few crypto of the utmost quality.

    1. Superb summary. Also not dissimilar to the way you’d evaluate a non-crypto investment opportunity.

      If you don’t mind sharing, how does your portfolio look like today? You mentioned ETH, SOL, chainlink below – any others?

      1. Yes, investing in crypto feels (to me at least) similar to investing in tech stocks. I am a software developer myself, so in my head I evaluate crypto a bit like I would evaluate a piece of software.

        I currently hold HEX, ETH, SOL, Chainlink and a tiny bit of BTC. I was also involved in the sacrifice phase for Pulsechain (developed by the team behind HEX), so I will have some pulsechain tokens if/when it launches early next year.

        To be fair, I haven’t checked the landscape for a while now. I’m sure there are plenty of other interesting/solid coins out there worth looking at.

  13. I completely agree with all of that. And ETH has a significant first mover advantage – which may mean the crypto ecosystem sticks with ETH even if it solves those problems more slowly than other coins.

  14. Nice article, thanks! Just curious, why do you think there is no “truly diversified vehicle that doesn’t hold speculative assets and charges reasonable fees” in this space yet? Like you, I would definitely be interested in buying into that, if it existed. And I’m sure we are not alone… How come no one has captured that market yet?

    1. Very early days in crypto and lots of regulatory burden.

      But I am sure it will happen within the next 12 – 18 months.

    1. Yeah – like the Ritzholtz guys and saw this earlier

      But if it means going to a financial advisor, I think I’ll stick to a DIY approach instead!

  15. Having done a bit of research over the past few days, Algorand (ALGO) has piqued my interest.

    Its fast, the fee’s are tiny, it supports dApps and NFT’s. It appears to have a good dev team (in particular, their head of cryptography is impressive), great leadership, good partners (they appear to have ties with the world economic forum) and a strong community. The brand and logo don’t exactly jump out at me, but the website looks professional.

    Does anyone here know more about Algorand? I will continue research into this one.

    1. Forgot to mention – Algorand’s founder is a bonafide genius..

      In particular, Silvio is the co-inventor of probabilistic encryption, Zero-Knowledge Proofs, Verifiable Random Functions and many of the protocols that are the foundations of modern cryptography.

      1. Incidentally, a friend of mine was approached by the Algorand team back in May of this year (he’s Italian just like the founder)

        Not sure in which context but like you, he said he was quite impressed with the founder’s credentials

  16. Pingback: December Reads: Three Down, Three To Go - Dr FIRE

Leave a Reply