If You Leave It Any Longer To Invest in Crypto, You’ll Be Chasing a Moving Target.
Economic conditions point to up only from here.
When Ethereum recovered from $36 to $89 in 2018, I thought my opportunity for giant gains would never return.
Boy, was I way off.
ETH made a parabolic 42 x rise to Valhalla, and I was sitting there thinking about how underexposed I was to an asset I was beyond right about.
I see people making the same mistake in this cycle without realising how exponential this could go and how few participants are currently in the market.
Cryptocurrency makes up 0.4% of global financial assets. You're either betting it goes up or down. The obvious lead question is, "Are we becoming more digitalised or less?"
My answer is more, so I buy more.
As Tony Robbins says, "If you can't define your investment thesis in one sentence, it's probably too complicated."
The recent Bitcoin rally has people chasing their tales. They've either sold out at break-even after surviving the bear market carnage or are now sat on the sidelines like war veterans, not participating in what is quite obviously the start of crypto summer.
People are holding back.
Cryptocurrency genius Ivan Liljeqvist says, "No, no, no, people, you need to be bullish in bull markets."
He has a straightforward message: "Be bearish and risk-averse before Bitcoin's halving, bullish and more aggressive after the halving."
While the halving is yet to come, the time to dive in is now.
The ETF has completely changed the dynamic, and it's the first time we've ever seen new all-time highs in both BTC and ETH before a halving event.
This chart below is delicious.
BTC is up 48%, SOL is up 64%, and ETH is up 69% this year. You can see all three assets are rising optically together.
In one day, Bitcoin ETFs took in $1 billion, or 14,706 BTC, in net inflows. This ludicrous demand is sticky because these more significant funds tend to stay in position once they allocate capital.
The total ETF inflow since January 11th is $4.1 Billion.
This chart is dog legging like a hockey stick.
Fed chair Jerome Powell has signalled that interest rates are coming down soon, and inflation, according to the Feds' numbers, is getting crushed.
It's also an election year, so we can expect stimulus handed out to voters like candy.
While I am bullish on Bitcoin and the ETF news, my strategy is not so focused on BTC.
I am looking further down the risk curve in smaller-cap cryptocurrencies because, in years past, we've seen all assets rise optically.
Established altcoins, further back in the cycle, have higher percentage increases due to their lower liquidity. As people's risk appetite improves, they rotate their "house money" from BTC to smaller caps.
My eyes are set firmly on Ethereum and Solana. Full disclosure: I have positions in both. It makes no difference to me whether you buy them or not.
You have to search for safety signals, and Former Goldman Sachs executive and Cryptocurrency savant Raoul Pal speaks my language.
Raoul Pal—Source
"All financial markets work the same way: you put capital in, and it comes into Bitcoin. It then flows into the less liquid assets, and they rise more. It's just that all markets work the same way, so it comes into Bitcoin, and it pushes up the other assets."
Comprende?
I see people asking questions online, such as, "Will that ETF money that's held in Vanguard or BlackRock come into ETH or SOL if it's stuck in a fund?"
That's like asking if a Nike, Just Do It advert will sell any sneakers. It's the attention economy. Once people get exposure to Crypto through a financial instrument they feel safe with, they will lean into other assets—the flow of capital proves this, and it’s just common sense.
The time is now.
It's up only from here with a handful of 30% stomach-churning pullbacks, but this year is a huge opportunity.
Raoul Pal —Source
"This is the great time, and this is the time when ETH outperforms Bitcoin, Solana outperforms ETH, and a bunch of altcoins will outperform Solana, so you know it's obviously a great opportunity. The big trade that's now on."
He's right.
But here's the catch. If you're not arriving late at the station and your bags are already packed with your top assets, you now need protection from yourself.
It starts with a simple strategy—Time Horizon.
You set a time horizon for how long you want your capital tied up and work your way backwards.
You choose a fixed amount within your budget to invest, and then you want to set it and forget it. This is different from DCA’ing in a bear market because now you want to think more about your exit strategy.
Unless this is a forever game for you, then more to you, but I want to take some lifestyle chips off the table.
Don't fall into the trap I did in 2021, trading in and out of assets chasing 30 x pumps.
Sticking to the top three assets—BTC, ETH, and SOL—will give you outsized results, and you need to do literally nothing.
Setting a time horizon and a fixed capital allocation protects you from your self-destructive behaviour, like rotating out into meme coins and NFT projects that can crash faster than a broken elevator.
The framework prevents trading like a drunken sailor.
Having a structured exit strategy is important. Let's say your asset doubles in price. It's wise to withdraw your initial investment and let the rest run deep into market hysteria.
I'll take some chips off the table before the close of 2024. Then, for each 50% leg up after that, I'll be slicing 10% off the top throughout the rest of the bull market.
The profit will go straight into fiat, not left in ETH or SOL. And most importantly, it will be ring-fenced so that I won't be reinvesting or ploughing those funds back into anything else.
This framework or rules of engagement take the emotion out of making financial decisions and stop me from climbing into some coin with money allocated for tax purposes.
If everything goes according to plan, I will leave my crypto portfolio with around 20% of my current allocation. I anticipate that we will all inevitably blow up and correct by 60%+.
Then I’ll start again.
I have this strategy because I can't predict the future, nor can anyone else. Will I sell at the very top? It's very unlikely. So, this helps me squeeze the juice from a trade.
This Tweet perfectly sums my thesis up.
Chat soon.
Great read again 👏