New Year, New All-time-high, New Crypto Plan

Its 2021, and Bitcoin has reached 32k USD. Either one of these might have spurred me to write my first post. Just sharing my thoughts, Not Financial Advice. 

I have been in Crypto since 2016, but I did not make it rich. I bought bitcoin, traded altcoins, bought more bitcoin with cash along the way up, and crashed spectacularly down in 2018 where I eventually sold everything, bloodied and defeated. (another story for another time, perhaps?)

 
This time, it will be different?

So with Bitcoin hitting new All-time-highs in Dec 2020, I got very interested in Crypto again. I do note that Crypto can be very volatile and I need a plan which will help me control my FOMO and FUD. 

In the past, I was not able to HODL as my portfolio was too volatile for me. Even when the portfolio rises it is too much excitement for me. This time, I hope to instill some stability into the portfolio, using stablecoin savings accounts or DEFI lending. Back in 2016-2018, I think there were limited options for savings using stable coins. There was lending on Poloniex and Bitfinex, but at that time I though that traditional markets probably offered similar gains. DEFI was definitely not present back then. 

 

What is Savings/Lending + HODL?

Now, imagine 99% of my crypto portfolio is in stablecoins, put on CEFI platforms (such as Celsius, Nexo, Blockfi and many more) or DEFI protocols (AAVE, YEARN and others), earning say 10% interest. The remaining 1% of my portfolio is put in BTC. If BTC crashes 50%, that is 0.5% of my portfolio, and it would take 2 to 3 week to recover that amount due to the savings/lending. In theory, my upside is still unlimited (as BTC can go to the "moon") while my downside is limited (read the cautionary note at the end of the article). For the non-stable crypto, it can be BTC, ETH or any other coin. Not judging :p. 

I will also use the interest earned from savings/lending to DCA into BTC. And HODL it (repeats to myself 3 times). 

If I am willing to take more risk, I can put 95%, 90%, 80%, as stablecoins. It depends on how much volatility you can tolerate. 

As I always say, "Its good to have dreams, but more importantly, we should be able to fall asleep"

 

A word of caution...

I do have some concerns with this method though, where you can lose everything

- Stablecoins are issued by companies (maybe except DAI) and have a risk of collapse. 

- The CEFI savings platforms also have a risk of collapse.

- DEFI lending platforms have smart contract risk too. 

Are the risk/rewards worth it?

I hope this post ages well.