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Crypto is giving us a once in a lifetime opportunity to achieve financial freedom. But sadly, 99% of investors will likely never get there. Here’s how you can make the 1%. 🧵: Your guide to building a successful crypto portfolio, and how to keep it. 👇
2/ In this thread, I’ll be covering: • Portfolio theory (risk/reward) • How to manage your portfolio like a pro • Yield maximisation and profit taking Not financial advice of course.
3/ Firstly, let’s clear up a common misconception. To make money in crypto you don’t need to get every call correct. In fact, you can make 10 bets and only hit 1 winner to still come out ahead.
4/ Let’s say you put $1k in 10 projects ($10k total). If 9 of them go to 0, but 1 does an 11x, you still profit $1k. I don’t strive for perfection in crypto, I strive for profitability.
5/ This means taking losses along the way in pursuit of positive returns. So what can you do to implement this strategy? Firstly, diversify. Over diversification is a bad thing, but under diversification can also be harmful.
6/ That’s why I recommend to most new investors to build a portfolio of 20 great projects. That way, you’ll still capture the overall trend of the market - but you’re not spreading yourself too thin.
7/ Here’s an example of a well rounded (albeit risky) portfolio. At least 50% should be in blue chips, with 20%+ in stables. The tokens you hold depend on what narratives you have conviction in. I’m constantly presenting new ideas on my YT and Twitter.
8/ If you’re more experienced in crypto, you’ll likely be able to manage a larger portfolio. But remember, the more projects you hold l, the more time you’ll need to dedicate to managing it.
9/ If the market is bullish, having exposure to more assets is generally advantageous. However in a choppy/sideways market like this, you have to be more careful about the quality and quantity of projects you hold.
10/ What does managing a portfolio consist of? • Taking profits • Finding the best yield opportunities • Staking and compounding • Rebalancing based on performance • Finding new projects and discarding existing holdings (if your thesis has changed).
11/ Let’s break down some of these key categories to help you become the ultimate portfolio manager. Firstly, taking profits. How you take profits depends on a multitude of factors, such as your: • Time horizon • Risk tolerance • Financial goals This is what I do:
12/ Whenever a project doubles, I aim to take out my initial investment and let the rest ride. This means you’re essentially holding tokens “risk free”. I implement this strategy for my riskier holdings, as I don’t touch my blue chips long term.
13/ I currently put 50% of profits into both $UST and $BTC. I have the long term goal of stacking as much #bitcoin as possible, as I believe it’s the only form of sound money on the planet. <a target="_blank" href="https://twitter.com/milesdeutscher/status/1507458048603865092" color="blue">x.com/milesdeutscher…</a>
14/ Aim to keep at least 20% of your portfolio in stables. This means you’ll always have dry powder to buy the dip. I do this by taking profits on the way up, and farming stables in the meantime. When I deploy, I restock stables at the next best opportunity.
15/ If you have a portfolio of 20 projects, you might want to consider staking 10 of them in order to maximise yield. I don’t stake everything due to smart contract risk, but I try to stake 50% across a variety of DeFi protocols.
16/ Where can you find the best yields? Firstly, @0xCoindix has a great product to scan APRs across multiple chains. Secondly, keep your eye on Twitter and YouTube for new opportunities. I don’t mean to toot my own horn, but I post many of my strategies across YT and Twitter.
17/ But staking comes at a time cost. You’ll need to stay on top of your pools, as rates are highly variable in crypto. How? Set aside a time each week to manage your LPs and farms, to ensure you’re compounding and seeking the best opportunities.
18/ Don’t have time? Well, maybe DeFi isn’t for you. 😆 But if you insist, then you can use autocompounders like @beefyfinance and @Reaper_Farm which make the job easier. But remember, there’s an added layer of risk when you use autocompounders.
19/ You may want to take a % of your profits from yield farming into stables along the way. Here are my 3 profit taking strategies for different market phases @SoundsTricky • Bullish when market is low • Bearish when market is high • Mixed when you’re unsure:
20/ Here comes the hard part of portfolio management: Rebalancing. Tokens can move drastically in price from the time of purchase. You might put in $1k into a project which is now worth $5k, yet another $1k investment may now be $200. Here’s where rebalancing comes in.