The AlucardCrypto Telegram group is already rolling just 1 day in. Join us here. A group member brought up a great topic that a lot of people can relate to — not being able to sell gains when they happen. FOMO is real, and many folks ride a pony all the way up then all the way back down because they want to turn a 10x into a 100x.
The solution of "have an exit strategy beforehand" is truly the best one, but unsatisfying to our degen nature, to be sure. Fortunately, I got a way you can have your cake and eat it, too. This is a method I use, so I'm not just whistlin' Dixie here.
So let's say you did well and got a 3x on an altcoin play. But the damn chart still looks good, all the dumbass moonbois in the Telegram are singing moonie songs, and you really want to be able to brag to your friends that you turned your shit paycheck into fuck you money in 10 hours or less. Here's what you do:
1. Once you get your 2x or 3x, take it all to ETH or BTC. If you're planning on holding your altcoin for more than a week, a stablecoin is even safer here.
2. Bank the macrocoin in the defi app of your choice, preferably one that pays a decent interest rate. The safe play that's still decent for me right now is Venus on BSC. Bottom line is you want a platform that allows overcollateralized loans.
3. Borrow up to 50% of the value of your deposit in a stablecoin. Do not borrow your altcoin directly if it's available. Stablecoins work best.
4. Swap the stablecoin for the alt you want to hold.
5. Hold until you get your 100x or 0 — your choice.
There are many advantages here.
First, by taking your win into a macrocoin, you effectively reduce your volatility. ETH or BTC may move, but they won't tank 90%, especially not in this bull market.
Borrowing against that asset hedges against the technical risk of holding it in the platform. If you're not a defi dog or you're scared of defi, this is important. The hedge is if the entire platform goes down or gets hacked or whatever, your debt disappears along with your asset. That means you only lose 50% of what you put in if you borrowed 50%. If you got a 2x, you're back to your original capital. Frustrating, but avoids loss.
Finally, you get to hold your altcoin. Even if the altcoin goes to 0, you only need to sell back a portion of your banked macrocoin to close your loan and repeat the process.
I like to hold BTC or ETH in this market because there's a good chance of benefitting from the leveraged exposure, possibly even allowing more borrowing for altcoins if you catch the right wave. The biggest caveat of this strategy, which I like to call the Fed Strategy, is that you must deleverage when the market corrects. And you must deleverage faster than the market. It's best to borrow only 10-20% until you get good at this.
PS — There's a way to get even more gainz while protecting your position and speculating in your alts using yield farming, but I'll save that for another post.
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Gems I'm investing in:
NFTs - Doki Doki
