What a wild roller-coaster ride in the cryptocurrency world over the weekend. Probably gut-wrenching if you’re fully invested in crypto (which I hope you’re not).
This is the first time I’m writing in greater detail about the crypto in our portfolio. Crypto doesn’t feature in my portfolio updates because it’s still only a small portion of the portfolio.
I should state upfront that I’m far from an expert in crypto. I’m just sharing my thoughts on how I view crypto and where crypto stands in our portfolio. I’m definitely still learning and open to other’s views on crypto, so do get in touch with me if you would like to discuss more about crypto.
Also, I don’t write much about crypto because I view the asset as still pretty new (vs the stock market) and speculative, so I think it hardly qualifies as a long-term investment just yet.
However, crypto has seen wider adoption lately. The global crypto market cap stands at around $2.3T and a little country in Central America called El Salvador has even adopted Bitcoin as legal tender. I admit that I had to Google where El Salvador was – which by the way, looks beautiful but seems pretty dangerous from the photos. As the world moves more and more into the digital realm and metaverse, it makes sense that native digital currencies should become more widely accepted.
The funny thing about crypto is that the more believe in it, the higher its value. Of course, many who are getting into crypto now are probably just speculators hoping to cash out at higher prices. For true believers and early adopters though, crypto does present a compelling use case as a digital currency which hasn’t really played out yet.
Personally, I would love to see a future where crypto takes a functional role as a medium of exchange in our wallets especially in cross-border transactions. Currently though, crypto does have many hurdles to overcome before reaching that status, but I’m optimistic of its chances.
I’m definitely not particularly knowledgeable about crypto and I can’t say I fully understand how it works and its value. However, I do think that crypto has come to a point where the risk-reward is attractive to be considered as an alternative asset in investor’s portfolios.
Singapore where I’m based is also pretty supportive of crypto as long as it is regulated properly. Singapore’s regulator, the Monetary Authority of Singapore (MAS) has so far issued digital payment token (DPT) licenses to 4 crypto service providers – DBS Vickers, Independent Reserve, Fomo Pay, and TripleA. Read here.
That said, the risk as with other speculative assets is that value can go to zero. Even more so with crypto, many investors might get nervous when prices start to fall because there isn’t any underlying hard asset backing crypto, unlike a stock (underlying asset is a business, real estate (underlying asset is property/land/building), or even fiat currency (backed by full faith of the government).
Crypto investors just need to be fully aware of the risks and be able to stomach the wild swings that comes with this highly volatile asset. Personally, I plan to manage our risk through position sizing, i.e. by limiting exposure to crypto to around 5-10% of the portfolio.
Crypto portfolio breakdown
Without further ado, here’s our crypto portfolio (as of 6th December 2021):
| Coin | Cost SGD | Qty | Value SGD | P&L SGD | P&L | Weight |
|---|---|---|---|---|---|---|
| Ether ETH | $1,920.56 | 0.5241757704 | $2,954.58 | $1,034.02 | 53.8% | 42% |
| Bitcoin BTC | $2,733.23 | 0.04092737274 | $2,795.42 | $62.19 | 2.3% | 40% |
| Crypto.com CRO | $880.94 | 1019 | $814.14 | -$66.80 | -7.6% | 12% |
| Solana SOL | $350.00 | 1.33752717 | $351.87 | $1.87 | 0.5% | 5% |
| Dogecoin DOGE | $128.17 | 258.4317323 | $60.20 | -$67.97 | -53.0% | 1% |
| TOTAL | $6,012.90 | $6,916.93 | $904.03 | 15.0% |
I bought more crypto last weekend during the flash crash on 4th December, bringing crypto to my target allocation in the portfolio. I probably won’t post regular updates unless our crypto holdings change dramatically.
My main holdings are in the 2 largest crypto tokens by market cap, Bitcoin and Ether. Since I definitely don’t have time to look into the hundreds of tokens (more are always being created), I focus my crypto investments into those with the largest market caps. See CoinMarketCap.
I’ve invested mostly into Bitcoin but since Ether has performed much better, the value of my Ether holdings have surpassed that of my Bitcoin holdings.
Ether ETH
I’m expecting Ether to continue to rise especially if the efforts to upgrade the Ethereum network, called Ethereum 2.0 are successfully implemented.
From what I understand of the upgrades, if the Ethereum network can transition from a Proof-of-Work (PoW) consensus method (which is energy intensive), to a Proof-of-Stake (PoS) one, that would help lower transaction costs significantly.
Bitcoin BTC
As for Bitcoin, it’s the oldest crypto but seems to still have pretty good staying power. I’m not exactly sure why since transaction fees are pretty expensive from what I’ve seen. Maybe people are just more familiar with it since BTC has been the de-facto face of crypto.
Bitcoin advocates describe it as a store of value, since there’s a limited supply but I’m not particularly convinced since there are other tokens set up in a similar way. Well, let’s see how El Salvador fares in using Bitcoin as a medium of exchange.
Crypto.com coin CRO
I’m only holding CRO because I signed up for an account with Crypto.com. I needed to stake at least SGD500 worth of CRO to qualify for the sign-up bonus (USD25 worth of CRO) and to get the Crypto.com Visa card (Ruby Steel tier).
I also bought some BTC and ETH on Crypto.com to deposit into the Crypto Earn program, and some extra CRO to participate in the ETH Supercharger program. I might write a separate post to share more details about Crypto.com as I use and learn more about the platform.
If you use my referral link (or use referral code: eqqnqjbazw) to sign up for a Crypto.com account and stake for a Ruby Steel card or above, we both get USD25 in CRO.
Solana SOL
Solana is an alternative blockchain from Bitcoin and Ethereum, and is viewed as one of the potential rivals for the Ethereum network. Solana works on PoS consensus method and can process transactions much faster (and thus lower cost) than Ethereum network in its current state.
I bought a tiny bit of SOL mainly as an alternative to BTC and ETH which are blockchains based on PoW consensus method. I intend to monitor its price performance and learn more about the coin before investing more.
Dogecoin DOGE
I have an insignificant amount of Elon Musk’s pump coin Dogecoin. I’ve just been using the small amounts of Coinhako referral rewards to buy DOGE, just feels better psychologically since DOGE costs less. Coinhako now also awarding Shiba Inu coin (SHIB) for daily login but it’s really insignificant <$1 so I’m not even going to bother mentioning it. I just hold DOGE and SHIB for fun just because.
Here’s my referral link for Coinhako if you’re interested to sign up.
Concluding thoughts
Whether crypto can be considered a legitimate alternative asset class is still debatable, but I’ve invested because I would rather swim with the tide instead of against it.
Of course, there’s a very real risk of large decline in value or even total loss when investing in crypto, so if you’re dabbling in this space you should be mentally prepared. And if shit hits the fan, don’t blame anyone but yourself for your investing decisions.
That said, the potential for crypto is huge. Even if crypto succeeds in gaining universal acceptance though, we can’t be sure which one of the many hundreds will eventually prevail.
So unless you’re really conversant or super confident in crypto, consider only dedicating a small portion of your overall portfolio to crypto so at least you can rest well at night and on weekends (crypto market is open 24×7, don’t say I didn’t warn you).
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Disclaimer: This is not financial advice. I am not professional financial advisor nor do I work in the finance industry. Anything I write here is purely my personal opinion. Please do your own research and due diligence before investing into anything. All investments come with associated risks. Best to consult a financial advisor if you’re still unsure.
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