Over the past few weeks, crypto continue to hit all time highs and we are starting to see the main stream media reporting on more crypto related news. Undoubtedly, crypto is starting to get into the mainstream retail investors again.
We wanted to share some updates to our readers on where we see crypto and its place in our portfolio.
Since November, we first initiated our position in Bitcoin when the price was at USD17,000. We have shared that with our readers then. In the similar article, we also mentioned that we have some legacy Ethereum from the 2017 days that we are still holding until today.
Since then, in our monthly updates, we mentioned that we have been adding onto Bitcoin and Ether, averaging up on our position as we researched more into the world of cryptocurrencies.
Over the past few weeks, we have further added 3 more coins into our crypto portfolio: Binance Coin, Polkadot, and Chainlink. I think we are in the middle of a huge crypto boom now and that almost all coins are seeing huge price run ups over the past few months.
Here’s our holdings and average price:
|Bitcoin||Main digital currency with public ledger & max supply of 21 million coins||US$27,400|
|Ethereum||Blockchain w smart contract functionality||US$881|
|BinanceCoin||Main Utility token of Binance, the world’s largest crypto exchange||US$93.51|
|Polkadot||Connects different blockchains together – enabling it to “speak” to each other.||US$30.50|
|Chainlink||Connects blockchains to real world data||US$31.15|
Since reallocating our funds into crypto in December, our returns have more than doubled in just 3 months, and to be honest, it’s getting a bit bubbly now. We have also witness the crazy rise of $BNB which tripled for us at one point in just 2 weeks time.
While we are happy with the gain, we also are playing an internal tug of war: should we take profit? Is everything going to come crashing down? Or should we just let the profit run in case we are only at the start of the bull run? After all, crypto’s market cap is still really small if you compare to other commodities such as gold or even the stock market.
Internally, our game plan is that, we will hold crypto for 3 years and see where this takes us, unless there are more attractive opportunities that we need to reallocate our funds into. So even if the price comes down in the near future, we will be buying and average into our holdings. The more it drops, the more we purchase – this is similar to our US holdings too where we will always buy the dip.
Few days ago, Mr Budget tried to do a crypto transfer to his friend and the transfer went through almost instantly. I think you have to try performing a crypto transfer to realize the potential of the blockchain technology. On top of the instant transfers, there is only a small network fee and there is absolutely no middle man – it is as if you are transacting between you and your receiving partner.
The only downside of the crypto transfer now is that large recurring transfers may take some time as different companies / wallet provider requires different security parameters to be passed in order to prevent fraudulent transactions.
For example, our third transfer to an external crypto account took almost 12 hours for Coinhako to complete the transfer – which we learnt later that it is because Coinhako has too much transactions happening now and the security team cant keep up with the manual reviews.
For Mr Budget, crypto makes up more than 26% of his overall net worth, and it is quite a sizable amount. Moving forward, we are looking to continue allocating more funds into crypto.
Our thesis is this: cryptocurrency is still at its infancy and in fact, it is moving into adolescence now.
The benefit of crypto is undeniable – in the past 12 years, bitcoin has not had a single transaction error in over $10 trillion transaction. In 2020 alone, the banking system had $32 billion transaction errors. There are so many innovative use cases being built on the crypto currency network right now.
What if cryptocurrency continue to stand the test of time, and is here to stay for the next 50 years as it had over the past 12 years? What if we have the opportunity now to buy some coins, similar to when people are able to buy Amazon shares when it was in the hundreds 10 years ago? The risk vs reward is simply too big for us to ignore.
Here’s what Ark Invest have to say about cryptocurrency in their white paper:
Bitcoin offers one of the most compelling risk-reward profiles among assets, as our analysis suggests it should scale from roughly $200 billion today to $1-5 trillion network capitalization during the next five to ten years. In our view, capital allocators must consider the opportunity cost that will be associated with ignoring bitcoin as a new asset class.ARK Invest 2020 Bitcoin White Paper
The white paper was published in September 2020. Fast forward to today, Bitcoin has already hit $1 trillion in market cap earlier this week.
As always, we are here to share our thoughts – and this does not constitute an investment advise. Crypto is an extremely volatile asset class and if you do want to invest, do your own due diligence, and only invest what you dont need.
One thing to note, in a bull market, it is very easy for anyone to sound like an expert / to be right on everything – so we do want to caution that too. We may sound like an expert, but we are actually not – we are also just scratching the surface and trying to connect all the dots. Do read up more about crypto if you are mildly interested and if you do choose to invest, invest safe!