Crypto is giving us a once in a lifetime opportunity to achieve...

78 views Apr 12, 2024 ~5 min read

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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. 👇

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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).

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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:

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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.
x.com/milesdeutscher…

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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.

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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.

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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.

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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:

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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.

21/ As tokens move in price, the risk profile of your portfolio may change.

For example, many $LUNA investors’ portfolios started to skew heavily towards $LUNA as the price rocketed.

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22/ In this scenario you have a choice: 

a) Rebalance *some* holdings into other tokens to maintain a favourable risk profile.  

b) Continue to HODL, but funnel fresh capital into other areas to rebalance over time.

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23/ It’s all about opportunity cost. Remember, holding a token is the same as buying it at current levels. 

So, if you’re holding $LUNA at $120, you’re essentially saying you’d be willing to buy it at those prices. 

However keep in mind the tax implications of realising gains.

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24/ I could write a 100-part thread on this topic, but let’s leave it here for now. 😂

I’ll continue to post similar content to help you succeed in this crazy market. 

Give me a follow if you’re interested in seeing more!

If you enjoyed this thread, do me a favour by liking and retweeting the first part, so more people can see it! 💙
x.com/milesdeutscher…

Crypto is giving us a once in a lifetime opportunity to achieve...

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