How I am using BlockFi and Celsius to build my Bitcoin stack- Part 2
In my last article, I described how I use BlockFi to dollar cost average (DCA) into Bitcoin and Ethereum in order to increase my Bitcoin stack. My goal is to build a portfolio that can take advantage of the upside potential that cryptocurrency offers and I believe that Bitcoin and Ethereum offer the most risk adjusted upside. I also discuss how I take incremental profits on downfalls to avoid getting wrecked. Therefore, the cornerstone of my crypto portfolio for now are Bitcoin and Ethereum. This is where I invest most of my money and have the most confidence in the medium to long term. If you want to read that article than click here to link to it.
Now I would like to share my strategy for Celsius and how I am using this platform to help in building my Bitcoin, Ethereum, and other altcoin stacks. Keep in mind that this is my strategy and it is not financial advice. I am not a financial advisor and you must understand that cryptocurrencies are extremely speculative and the massive potential upside comes with massive potential downside. With that being said, I also want to share that portfolio allocations and knowing when to take profit are going to be different depending upon your goals. Just like a professional boxer would train differently than a professional volleyball player, an investor looking to retire next year is going to have different goals and strategies than a young person living at home rent free. It’s important to try to define your goals so that you can implement the correct strategy for portfolio allocation.
I prefer to invest in altcoins (coins other than Bitcoin) that are on Celsius. I find that trying to muddle between six thousand different cryptocurrencies is not the most productive use of my time. Additionally, I am not extremely tech savvy and don’t have the knowledge to yield farm on multiple platforms or provide liquidity to decentralized exchanges. Celsius offers me yield which is an added bonus and gets my cryptocurrency off of exchanges where I am more prone to make emotional decisions that I may regret. Celsius has hundreds of thousands of clients so I would infer that being listed on Celsius will also bring new eyeballs to these projects which can potentially improve performance. Risk in cryptocurrency is typically related to market cap or the price of the coin multiplied by the number of coins. Generally, a larger market cap project is going to be less volatile as there are typically more holders and more value perceived by investors. Celsius doesn’t have super speculative low market cap projects and all of the cryptocurrencies can be purchased on Binance.US and Coinbase so I don’t have to deal with wallets, Uniswap, or crazy gas fees.
Investing in altcoins can be fun and frightening. During an altcoin season, dopamine levels can run through the roof and you can feel unstoppable. When Bitcoin dumps, I can sometimes see my hairs turn gray and my blood pressure spiking like a geyser. As far as choosing which altcoins to invest in, I can not provide recommendations on exact coins. I suggest that you research the projects that you are interested in and think have a strong narrative. When I began investing on Celsius, I started researching from the coins that paid the highest interest. It worked out, but may not be as effective as today. I also like my altcoin investments to be diversified in different sectors. As an example, Compound, Aave, and Synthetix are all DeFi plays. If you are extremely bullish on DeFi you may want to buy more than one. Some of the other sectors to look at are payment coins, oracles, decentralized exchanges, privacy coins, and unique niche projects. I enjoy researching a small group of coins and have found it to be dually rewarding when one that I have picked goes up in value.
Knowing when to buy altcoins is particularly challenging. It’s easy to say to purchase when the market is down, but you never know when it’s going to stop dropping. You can try to follow technical analysis, but this only works when the technical analysis works (typically in hindsight). A couple things that I have learned is that altcoins do well when the Bitcoin dominance gets lower (you can see this reading on CoinGecko and Coinmarketcap). The typical pattern is that people get into the money initially and invest in Bitcoin. When Bitcoin goes up it often will pull the market up with it to a lesser degree. Once Bitcoin calms down and trends sideways, altcoins will usually start to pump higher. Often, certain sectors will pump on certain days. This is why I like to diversify between different projects and sectors.
Personally, I don’t move all my money in at one time. I like to spread it out to take advantage of ebbs and flows in the market. Again, there is no one size fits all and maybe there’s a piece of news about a particular project that inspires me to invest in it and I will do so spur of the moment. Other times, I will put in a limit order on a cryptocurrency in my Coinbase Pro or Binance.US account to try to take advantage of dips.
Exit Strategy
If knowing when to purchase altcoins is challenging, knowing when to sell is grueling. Greed is an intoxicating drug and finding hype on the crypto markets is as easy as signing up for an online dating app. I recommend that you create rules depending on your goals. The key mantra that you want to keep in mind with altcoins is to take profits. It’s safe to expect that many altcoins will fall again and that at some point Bitcoin dominance will increase so make rules on when to sell and stick to them. Keep in mind that initially transferring coins from Celsius requires one day for addresses to be approved. One strategy that I use is to try to get my initial investment out when a coin goes up. As an example, I purchase $2000 worth of coin A. If it goes up in value to $4000, I sell $2000 into Bitcoin, Ethereum, or USDC and put that back in my Celsius account to accrue interest. I like to keep some of my stack of the altcoin in case it shoots up. Choosing when to sell is a personal decision and I find it easier to create rules and stick to them. Also, when you think the bull run is over it may make sense to move most of your altcoin holdings into Bitcoin, Ethereum, cash or a stablecoin as historically these tend to outperform altcoins in bear markets.
Celsius offers an option to earn interest in their CEL token. Unfortunately, where I live, I am unable to take advantage of this option. The Cel token has performed phenomenally and I wish that I was earning the extra interest in Celsius. That being said, I can’t really say at this price whether that is a good option or not. It is definitely worth considering if it’s an option where you live.
In summation, the importance of a strategy and plan can not be understated. I like to look at my portfolio in 3 tranches: my long term portion(DCAing on Blockfi), my aggressive portion (buying altcoins), and my savings portion (stablecoins and Bitcoin and Ethereum on Celsius). Perhaps this resonates with you and will help you in formulating your own strategy or at the very least gives you some ideas. Just like you can get in shape by going to the gym religiously or playing sports, there is no one size fits all approach to crypto investing. I appreciate you taking the time to read this article. If you are interested in opening an account on BlockFi or Celsius, I have included referral links below. We both get bonuses if you fund your account and I greatly appreciate it. I wish you the best of luck in this bull market and commend you for taking a step into the future of cryptocurrency!
https://blockfi.com/?ref=f6357635
BlockFi referral code: f6357635
**BlockFi is now accepting waitlist for the first-ever Bitcoin rewards credit card with some great features. Click here to be on the waitlist And to learn more details about the opportunity.
Join Celsius Network using my referral code 120824ba06 when signing up and earn $40 in Bitcoin when you first transfer of $400 or more (and keep it on the platform for at least 30 days) using my referral code! #UnbankYourself
Celsius referral code: 120824ba06
