How I am using BlockFi and Celsius to build my Bitcoin stack- Part 1
I want to predicate this article by stating that this is not financial advice. I’m here to share a strategy and explain my logic behind it. Just like there are many ways to cook a steak or drive home from work, there are many strategies for investing in cryptocurrency and it’s up to you to decide what works for you. If you want to skip ahead to the strategy scroll down a few paragraphs and I spell it out.
I got involved with cryptocurrency near the end of the last bull market in 2017–2018. I invested heavily in an altcoin that shot up almost immediately after I bought it. I risked a small amount of money for me and watched in elation as my portfolio grew exponentially into January of 2018. I had no strategy and next to no knowledge about cryptocurrency or the market. Greed set in and I held my entire stack thinking that if the market continued at the same rate, I could quit my job by the end of the year. Then the bear market hit me like a snowstorm in Texas. I wasn’t prepared, didn’t know what to do, and watched in agony as my stack shrunk down to it’s original size.
The emotional rollercoaster that I felt that entire year is hard to put into words. When the market was rising, I couldn’t stop checking the charts, getting a small boost of dopamine every time I saw the green arrow. I made more on certain days than I made working in an entire month! I regretted not buying more originally and FOMO’d into some other projects that I read about or saw on a YouTube video. When the paper gains disappeared, I felt like the Atlanta Falcons must have felt losing the Super Bowl to the Patriots after having a 25 point lead with less than one half to play. I asked myself: “What happened? Why didn’t I bank some of my gains? Will the market come back? Why didn’t I convert some of my gains to Bitcoin?”
Frustrated, I quit the crypto market for a while. In 2020, I got back in and decided that I would buy a large amount of Bitcoin and Ethereum prior to the halving and in anticipation of Eth 2.0. Then March and Covid came and my entire portfolio got decimated. I watched in horror as everything came crashing down and sold everything at just about the worst possible time. Memories of 2008 stood out in my head and my work got heavily impacted so I made the move to conserve capital.
By July, my pay at work had diminished severely. I still had belief in crypto and felt that the narrative was extremely strong after seeing the market gain strength after the halving. But now I had a dilemma, I didn’t want to assume too much risk and my portfolio had shrunk when I sold before the Fed bailed everyone out. I decided to make a strategy and felt that crypto would be the best asset class to make up my losses. My logic was that the money was flowing into stocks and then it would flow into crypto as people became addicted to the speculation and quick gains.
So here’s the strategy that I came up with. I first thought about how much I wanted to invest in crypto each year. I withdrew that money from my bank and purchased USDC on Coinbase. I transferred the entire balance to BlockFi. I did some research on BlockFi and concluded that it was a great place to start building my stack because it’s an American company, has an exchange built in, and got good reviews. The USDC is backed by dollars and I felt it was the stablecoin that I was most comfortable holding. One important thing that I did immediately was opt to get paid interest in Bitcoin.
So I had one year worth of crypto investments in USDC on BlockFi earning 8.6% per year paid in Bitcoin. I took my entire amount and divided it by 365. Every day, I invested in Bitcoin (most), PAXG (least), and Ethereum (middle). You can adjust your allocations however you see fit. I do believe that Ethereum and Bitcoin are the most conservative pure crypto plays and chose these as the cornerstone of my portfolio because historically they have held up best in bear markets and have outperformed in bull markets.
I was fortunate to get involved and build up a nice stack of Bitcoin and Ethereum before the markets really took off in December. I like this strategy because it gives me the pleasure that I get purchasing crypto daily. I also like it because it’s systematic and doesn’t require emotional decisions which have burned me so many times in the past. It’s also great because when the markets are down, I am able to make a purchase and get more crypto for my money. The fact that I get paid interest on all of my coins in Bitcoin has really accelerated my interest payout as interest from July has quadrupled with the rising of Bitcoin!
It’s important to have an exit strategy or you will end up feeling like so many of us who watched our gains disappear like the stock market’s credibility fall after Robinhood pulled the rug on retail investors in Gamestop. But I digress. My exit strategy is to take gains on any major pullback (25% for me). You can set this pullback up with whatever figure you feel comfortable with. I only sell a small percentage of my stack on these pullbacks (again you can vary this depending on your risk tolerance). The proceeds from the sale go back into USDC and I earn 8.6% interest paid in BTC. And since I am still buying daily, I view this as an opportunity to buy in at lower prices.
This strategy has worked really well for me. I would have made more had I invested my entire amount in July, but I didn’t have a crystal ball and knew that I had to have a strategy this time to remove my emotion from the equation. I am seeing nice gains and am prepared to continue to lock them in as this market plays out. I also like that I can use this strategy in a bear market as well because it is consistent and I am controlling how much money I am allocating to cryptocurrency each year.
Every investor has different goals, risk tolerance, market knowledge, and budgets. I’m not going to be arrogant and say that my strategy is the smartest, most conservative, or fool proof. But it is a strategy and it is easy to follow and implement. I think that this is a good option if you are late to this bull market and still want exposure. If you don’t have any holdings, you may want to build an initial stack and grow it with daily purchase. I will follow this article up with part II which goes into more detail about my speculative portion of my portfolio and my strategy for using Celsius to be more aggressive on Altcoins. Thank you for reading and I hope that you have found my perspective helpful. If you are interested in using BlockFi or Celsius, my referral links are below and we both get a bonus if you fund your account using the referral links. If you do decide to use them, thank you very much. Best of luck and I wish you success in your crypto endeavors!
BlockFi referral code: f6357635
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Join Celsius Network using my referral code 120824ba06 when signing up and earn $30 in BTC with your first transfer of $200 or more! #UnbankYourself
Celsius referral code: 120824ba06
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