I Have Limited My Crypto Exposure: Here’s Why
Investors remove crypto positions to mitigate risk, realize profits, rebalance allocations, and shift capital into more viable long-term opportunities. This is a healthy practice that is a crucial aspect of effective portfolio management. Pruning your portfolio helps it become even more fruitful. This is why I have removed certain assets from my portfolio. Every investor should reevaluate their portfolio periodically.
Whether the bottom is in at $33K or not is still not that important, as prices could very easily revisit that level. In all honesty, they could even go a lot lower. Sometimes a “good opportunity” has to be avoided for the sake of capital or portfolio protection. You have to remember that if BTC loses 29K, the next meaningful support level is all the way down at $20K!
I think that alone is cause for caution. Besides, as mentioned in a recent post, if you have capital coming in, you can actually stack it up to buy the worst-case scenario. When you are simply buying or accumulating crypto as a long-term play, crashes don’t really matter. They provide the perfect opportunity to bring down your average, depending on how low it is, of course.
The Hidden Dangers Of The Cryptoneur Mindset
For those earning a living via crypto, it can be a little dangerous. Yes, it can also work in the cryptoneur’s favor, but if it drops too low, it can become a problem. Bearing in mind that a severe correction leads to a reduction in earnings. This is why in my latest post, I reveal that I am not buying much at all. Besides stablecoins, I am not that interested in accumulation.
Risky Assets Removed: Why I Cut Higher-Risk Crypto Positions
I am not buying any small or micro-cap projects. I love picking up small projects early on and waiting for significant gains. However, this is not the time for that. If this market heads lower, these coins will bleed like there’s no tomorrow. I am still going to add to some of these existing holdings once I see certain confirmations, which will give me some confidence to continue accumulation.
Fortunately, as mentioned before, regulatory issues have limited my involvement in DeFi, which was initially a massive concern for me. It has actually proven to be a blessing in disguise, protecting me from a heavy drawdown. I have subsequently done my best to utilize this “disappointment” as an opportunity to focus on other areas. So there are risk-on assets already in my portfolio, but I am not adding to them unless I am actually earning them via the “incentivized economy”.
Am I Still Bullish On Crypto? Here’s My Honest View
My current moves might signal a bearish bias; however, that is not the case. As mentioned before, if you already have exposure to the crypto market, you are set to go. I don’t need more exposure at this point. It is more important to strengthen my existing hedge. That being said, I would rather avoid using this hedge. I would rather see the market go up, as my position is obviously stronger than my hedge. I am still pretty bullish, especially since BTC is back in the $38K “box”, which didn’t look likely when we dropped to $33K recently.
Looking Back To 2021: Lessons From The Last Bull Run
When BTC crossed $50K in early 2021, my readers will remember that I began a shift. Approximately 40% of my portfolio moved into stablecoins between the $50K and $65K levels. This proved to be a lifesaver. This is not to say that I am expecting a downturn, but I do hedge my own intelligence. What if my instinct is wrong and we drop to $20K? I would rather be prepared for a situation that doesn’t take place.
Building A Shelter For Your Crypto Life Before The Next Storm
People don’t build hurricane shelters because they are expecting a hurricane. Rather, they are aware of their location and of the very real threat of hurricanes. We are in a market, and downturns will arrive at some point. Preparing for all scenarios is the best plan. Certain strategies perform better in a downturn, while others can actually thrive in a sideways market. Why on earth would you only prepare and plan for one outcome? That outcome, obviously being price appreciation, is a mainstream approach to markets.
Why Cryptoneurs Should Become Market Specialists
We, as cryptoneurs, should be Market Specialists, creating multifaceted approaches to the market. We should see certain aspects of our portfolio performing well even in a downturn. Once your portfolio is large enough, that isolated section can sustain you. This is like securing three or four paychecks from one job. The best approach, then, is to use one of these streams and reinvest the rest.
When that particular sector of your portfolio goes through a difficult patch, simply shift to the arm that is performing the best and reinvest the income from the previous sector. If that can become your goal, then imagine the strength and security of your portfolio. Furthermore, imagine what happens when the market hits full bull again! This is not a six-month goal; it will take years of hard work, accumulation, and constant planning.
The Curveball & The Multi-Strategic Approach
Life, as well as the market, has a way of throwing you a curveball every once in a while. As I mentioned, regulatory issues have forced me to make some serious adjustments, which is another reason why strategic diversification is equally as important as asset diversification. It is also a wake-up call to the single-strategy portfolio holder. What happens when your strategy comes under attack?
A multi-strategic approach is vital for so many reasons, and this is just one of them. Always try to create alternative income streams wherever you can! Diversification and expansion are excellent for any crypto asset portfolio.
Conclusion
So, for now, all risky asset accumulation is paused. Stablecoin and certain Layer1 projects only! Of course, a little BTC won’t really hurt either. The focus is on increasing my passive income and subsequently creating a monstrous hedge by building a flow of incoming value that can eventually overpower bearish price action.
Stablecoins will help, especially as my allocation dropped to approximately 20% over recent months. I am looking to aggressively increase this again. It’s important to remember that even legendary investors such as Warren Buffett remove investments from their portfolios from time to time. Thanks for the read, see you soon!