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My Cryptocurrency investing strategy (evolved)

February 10, 2022

I wrote recently about my crypto investing strategy. Shortly after, I noticed this brilliant tweet from Vinny Lingham:

The first step to financial success is figuring out the difference between saving, trading, and investing.

The last step is then knowing how to correctly allocate your resources to each one.

— Vinny Lingham (@VinnyLingham) February 1, 2022

In the past I’ve done each of these three, thinking it was one of the others. That led to a lot of mistakes.

For me, investing is defined as buying and holding assets with a long-term view of them appreciating in value. To be able to do that, you need to have a strong conviction in your overall investing strategy and the specific assets you invest in.

I think the other thing that’s important is to have a set of rules for yourself. Investing with a long term view can be difficult. There will likely be price volatility and shifts in macro trends along the journey. Having a set of rules for yourself helps to keep emotions under control and avoids impulsive decisions.

So, I spent some time working on my rationale for investing in crypto and the specific assets in my portfolio. Interestingly, this led to me selling three of my assets. Either I didn’t understand them enough or didn’t have enough conviction in them for the long term.

I also put together some rules for myself. Whilst I had most of these rules in my head anyway, it was nice to get them out and organise them.

The updated version is below. I hope it’s useful, I know it is for me. If you’re investing in anything with a long term view, I highly encourage you to go through a similar exercise.

Overall Investment Case for Web 3 / Decentralisation

People are starting to tire from centralised banks, government and big tech. Over the next decade, Web 3 and decentralisation will eat Web 2 and centralisation – in the same way software ate the world.

‘Web3 is the internet owned by the builders and users, orchestrated with tokens.’ – Chris Dixon (Why Web3 Matters)

Investing Rules

  • Only put in what I’m willing to lose
  • Don’t over commit. Avoid a position where I have no choice but to take money out (and therefore risk selling at a low)
  • Place bets around infrastructure and fundamentals (which are more likely to endure), rather than specifics (which are more likely to come and go)
  • Have fewer, high conviction bets
  • Take a meaningful position. Buy more in the dips
  • Have a long term horizon (unless something macro materially changes)
  • When the time comes, don’t be greedy. It’s fine to take money off the table and reallocate. Things don’t have to be held in full forever

Portfolio / Investment Cases

AssetInvestment Case
Bitcoin (BTC)Bitcoin becomes digital gold.
Ethereum (ETH)Ethereum becomes the world’s dominant global banking and financial network. It will be the dominant platform for decentralised finance (DeFi).
Render Token (RNDR)Render becomes the world’s global rendering engine for the metaverse.
Helium (HNT)Helium becomes the leader in decentralised wireless networks and 5G infrastructure.
Solana (SOL)In a multi-chain future, Solana will become one of a small number of dominant layer one blockchains.
Fantom (FTM)In a multi-chain future, Fantom will become one of a small number of dominant layer one blockchains.
DeFi Pulse Index (DPI)Diverse coverage of the decentralised finance (DeFi) sector. DeFi will disrupt traditional finance.
Bankless DeFi Innovation Index (GMI)Diverse coverage of the high growth, early stage decentralised finance (DeFi) sector. DeFi will disrupt traditional finance.
Data Economy Index (DATA) Diverse coverage of decentralised data-based products and services. These will disrupt the data monopolies built in Big Tech over the past 20 years.
Index Cooperative (INDEX)In a world where Index funds become a significant percentage of the overall crypto landscape – Index Cooperative DAO will gain a significant percentage of the crypto index market.

Lastly, here is my current allocation for each asset:


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