Today I am going to focus on the wonders of StableCoin. A few days ago I wrote an article in which I warned that another crypto storm had to be on the way. The crypto environment is massively overheating at the moment and, as with the weather, prolonged periods of heat create perfect storm conditions. I believe today Ethereum will break ?1000 and you don't need to look too far to see what BitCoin has been up to recently.
Those of you who follow me know that after September 2020 I am suffering from a bit of FUD as my crypto portfolio went from and all time high to a massive loss almost overnight. I am pleased to report that yesterday I hit a new all time high that even surpassed late August 2020
You also know that I am determined not to repeat the mistakes of early September.
Last time round I chose to hodl my way out of it and my recovery didn't even start until the beginning of November. So it took two months to even start flickering back to life. This time round I would like to think I am a little wiser. So while my portfolio is up my strategy has been to move almost all of my holdings into StableCoin.
Everybody knows I love DAI and in fact I am holding DAI in two wallets. These wallets could be defined as tradable and non-tradable.
The non-tradable holdings are in Celsius, which is almost entirely passive. Assets held in Celsius are just sitting there staking at >10%. Due to gas fees it is my plan to hodl and stake until I really need them. My mid-term target is for Celsius to eventually be holding at least 100% of my initial investment amount in stablecoin. I am already well on my way to achieving this.
Once I have reached this point I can never lose.
The tradable holdings are in COINBASE and this is my active account where I buy, sell and convert. In the light of the incoming storm I am rapidly moving most of my assets to DAI. The only exception being my TEZOs Coin Jar which - however much it fluctuates - represents pure profit and is staking at 4.67% APY.
As things stand at this moment 80% of my total original investment value is being held in StableCoin. Depending on market conditions I hope withing the next couple of days for this to increase to 90%. The current value of my holdings is about 120% of the original investment pot, which after six months of trading, and despite September, is not too bad - especially when compared to the returns on bank savings accounts.
The lesson I have learned is to consolidate, but this has both pros and cons.
Disadvantages of Hodling in StableCoin
- the portfolio value remains relatively static (allowing for staking rewards)
- short term opportunities for massive gains when a currency goes on a run are lost
Advantages of Hodling in StableCoin
- The portfolio value is stablised at a profit
- Staking of the non-tradable assets gives a return of <10% which is both above inflation (so in real terms your money grows) and far better than banking returns offer.
- Coinbase offers a staking reward on DAI of 2% and while this is below the rate of inflation it is not static and still far better than having the funds in a bank.
- A stable investment fund is available to buy the dip - or correction - when it comes. Imagine a scenario in about a month's time when I can buy BitCoin for ?15,000 rather than ?30,000. To the unfamiliar this might seem unlikely but just 3 months ago BitCoin was available at ?7500
- Hodlng the way out of a correction while holding non-StableCoins is far from a guaranteed method. This means either taking a massive loss or having a huge amount of assets tied up, which means they cannot be leveraged into profit. In September this was my chosen strategy and it broadly failed. Until Christmas about 60% of my assets were tied up and untradable because of the unprofitable market conditions. Look at TEZOs, Cosmos, OMG Network and EOS. The fact is that in the long term they may well recover, but in the meantime this is tantamount to praying for water in the desert and more devastatingly it severely hampered my ability to trade and grow. Hodling in StableCoin avoids this in that when the storm comes and prices bottom out (working out when this happens is a trick in itself) there is a stable fund ready to go again.
Conclusion
So in the end, in anticipation of the correction, and in an attempt to avoid the mistakes I made in September, I am getting out early. In the short term this may cost me in terms of opportunity, but in the mid-term it is my hope that I have got it right and soon I will be ready to go again only, unlike in November, it will be from a position of strength rather than a position of weakness.
While it may seem that I am effectively putting my portfolio on ice this is not entirely true even if a massive part of it is becoming inert. Please remember my non-tradable assets are staking at a high rate, my tradable assets less so and in the meantime I am still feeding my portfolio with free crypto most notably from COINTIPLY and Publish0x
Additionally, for my business, in the next month or so it is probable that at least one of my clients will change from PayPal to DAI as a method of payment. This DAI will be dropped straight into Celsius.
I may lose out in the short term but in the longer term I would like to think I am on to a winner.
Stay safe and stay well.
