2021 Crypto Thesis

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The Tech sector is getting crushed and Crypto is not. Especially not Bitcoin which is moving higher with strength. That is very unusual on a historical basis. A very bullish sign for crypto. Isn’t this reminiscent of when ET and Elliot disconnected in that old movie?
The assumption that Bitcoin moves are highly correlated to the higher-risk Tech Sector is now suspect. The correlation seems to be diminishing. I’ve long held the view that Bitcoin as “digital gold” was a daffy idea. Just rewind a year to March 2020… there was nothing “Gold” about BTCs performance back then. But, times may have changed. Maybe BTC is more a precious metal story than a tech tale. I am sitting with my Reeces Pieces watching with interest to see how this all plays out.

This is the promised Crypto Update. My strategy is threefold. First, I hold a core position in the three best coins (BTC, ETH, and LINK). Secondly, I have two speculative positions in VeChain (VET) & Enjin (ENJ) (not on Coinbase). My third strategy adopted this week is best described as a shotgun approach. I am buying small stakes in the cheapest coins on CoinBase.
Coinbase only accepts valid projects. It tries to minimize projects that might later become “sh$tcoins” in the colloquialism of coin traders. So, valid projects. My thesis is that these low dollar/coin projects will attract speculation. Some already have.

There is something fundamentally different between this rally in BTC and the ALT coins that weren’t present in 2012 and again in 2017-18. Blockchain was ridiculed for years. Laughed at by every legitimate investor & investment firm on Wall Street,.Now, it’s being embraced and going mainstream. PayPal, Visa, Bank of NY, Tesla, and others have moved into this space. Possibly there will become an institutional fear of missing out (FOMO).

The Wall Street Cheat Sheet definitely applies to Crypto. So where are we in the market cycle? I submit we are in the “Belief” zone with “Thrill” and “Euphoria” yet to come. I base that on where BTC is relative to its 2017 run. Using rough numbers, it moved over its 2013 All-Time High (ATH) at ~$2000 and ran to just short of $20,000 in 2017. Once it hit about $10,000 (a 5X move) new Crypto investors flooded what had been a quiet and fun trading space. By Nov 2017, I could hardly walk the halls at work without hearing a Bitcoin reference. It topped at about a 10X move over that previous $2000 ATH.

So far in this cycle, BTC has moved over its 2017 ATH of $$20,000 and is now about $47,000. That is a 2.25X move over ATH. If past is prologue, during this run, BTC will test $100,000 at a minimum. If it actually mirrors the last run, the top will be closer to $200,000. Sounds ridiculous, doesn’t it? But $100k is just 2.1X away and $200k about 4.4x from where we are now. A year ago BTC hit a low of $4000. It has the ability to make surprising moves. I believe my thesis that BTC can double at least once more this rally is not complete Fantasy Island.

Where do Alt Coins factor in? Well, when BTC enthusiasm swelled the market last cycle, the moves made by Alt Coins were truly epic. ETH went from $9 to $1200. XRP (not recommended to own) went from .006 to over $3.00. That probably won’t happen on that kind of Order of Magnitude this time, but I suspect the % gains of the Alts will be pretty awesome.

So that brings me to my “Shotgun Strategy” There is no way to legitimately do Fundamental or Technical Analysis of these coins (barring the extremely short term charting done by futures traders). It’s impossible to figure out a future stud from a future dud. I’ve decided to embrace them all and let the winners self identify. This strategy offends me. I always want to tip the investing scale via analysis… but I cannot do it in this case. Essentially I am building a pool or a Mutual Fund (so to speak) of coins on Coinbase. The only driver of my choices on CB was to focus on low price DeFi coins- you can build your own list of equally valid guesses with a couple of hours of work. The ones I am in / adding to are below.

I am not doing this on the other exchanges I use because I trust CB has a lot to lose by listing a verifiable “sh$tcoin”. CB has applied to become a publically traded company- the last thing they need as the SEC evaluates them is to have some coin blow up as a scam. Scam coins exist. This remains the Wild, Wild, West of investing.

Below is what all three of the strategies (para 1) look like in my portfolio. If you enter into crypto trading do so with your eyes open and know the risks are outsized in proportion to the potential gains.
Hope it’s helpful!

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