Pretty much anyone can build a bulletproof crypto portfolio for the current ( and the next ) bull market cycle. Let’s dive in and learn everything from scratch.
To HODL, means to “Hold on for dear life”. This is a well known phrase used by the crypto veterans that helps new people to navigate the stormy seas of volatility. Coincidently the mere fact of having a HODL portfolio will be the second most important factor for surviving and thriving in the crypto bull market that’s just starting in 2021. The most important factor is off course taking profits on time. Before you strap yourself in for the wildest ride of your life, let’s take a step back and learn the basics that will become your armor and shield.
Please be advised that we are in no way financial advisors and this article is written for educational purposes only. An investor always thinks and acts according to his/her own free will and should therefore always arm themselves with all the necessary information in order to make the best strategic decisions.
Students, winners and an old grannies
Being a newcomer to the crypto currency market, is even worse than being a starving college student at an exquisite all you can eat buffet with all expenses paid. The sheer volume of sensory overload is off the charts. The information flow can knock you off your feet in seconds and before you know it, you have to be fished out of the ocean of data and resuscitated by your friend Jim, who’s been dabbling in crypto since 2014. Luckily for you there is off course very good and solid information out there to help you on your quest through the crypto forest and contrary to your data hungry mind, we will be focussing on the human aspect of crypto more than on anything else. Generally newcomers will either be students, winners or grannies. Note, all of these 3 are perfectly fine and it’s very important to be honest with yourself. Let’s look at all 3 types.
The student is the person who swallows all the information that he/she sees; line, hook and sinker without even having any tangible goals or strategies in mind. He/she will jump from one “hot” and “sizzling” coin to another, exhausting and empovereshing themselves in the process. This person is excited, emotional and very impatient. If you find these traits in your character, it’s perfectly ok! We all have them sometimes. Again it’s very important to be honest, since the worst enemy of the investor, is the investor himself.
The winners on the other hand are slightly different. These fast, slick gunslinging guys and gals seem to have a natural talent for anything spicy and risky. They usually come from a pedigree of avid traders and have perfected their skills over the years. They are perfectly comfortable with losses, since losing is a part of the game. They love risks, yet they take “calculated risk”, never working with more than 5% of their total holdings. It’s very important to remember that ALL winners used to be students at some point. What has sent them apart from the rest, is strategy, experience and more often than not, good mentors who stand by their side, slapping them on the head with an occasional slipper or a rolled up newspaper. If you are dedicated and if you are ready to put in the hours of teeth grinding hard work and sleepless nights, you will definitely become a winner. That being said, not many of us simply HAVE the time these days. We are working, raising kids, going to saxophone lessons and stomping the dirty laundry into the washing machine. For these kinds of people there’s a 3rd type of person.
We’ll call her old granny Sylvia. She could care less about the SHA256 hashing algorithms, Bysantine fault tolerance, blockchain tech and the upcoming legal mudslinging contest between Craig Wright and some poor soul who dared to criticise the holy BSV coin. Sylvia is a smart, pragmatic, patient and savvy lady. Yes, she did enjoy a fair share of sex, drugs and rock and roll during the Woodstock era of the 1960’s, but now she’s can’t be bothered to learn too much about crypto, since she’s baking cooking for her 3 grandchildren. Besides, she lived through the 1980’s LTCM bust, the 1990’s dotcom boom and through the 2008 great financial crisis. She knows that all of this cool and exciting blockchain technology will definitely change the world, but it won’t happen overnight. Therefore she’s got nothing by time and her bustling garden full of Dutch tulips and fruit trees.
Let’s not kid ourselves. There’s a granny in all of us. Who in god’s name has the time to grow roots sitting nose deep in charts, textbooks and youtube videos these days? When it comes to crypto, there’s one very important wisdom that even the winners follow religiously; a conservative hodl portfolio that will be the backbone of your crypto adventure. This is completely up the alley of granny Sylvia. Do you really think she cares about the XRP and Tether lawsuits? Or even about the ETH 2.0 smart contract implementation? Hell no! She’s rocking a bulletproof hodl portfolio that she can afford to forget about for a few years if need be. This gives the old granny what the winners and the students can only dream about: peace of mind and a damn good night sleep. So what is this magical beast that is the HODL portfolio?
HOLD portfolio fundamentals
The book “the 80/20 principle” describes the Pareto principle of unequal distribution. It’s without a doubt that Vilfredo Pareto can be considered as important in crypto investing space as the legendary Satoshi Nakamoto himself. Why? Simply because the 80/20 distribution of the crypto holdings, is what makes granny Sylvia the winner time and time again, since the majority of her crypto holdings are pretty much stress free.
A hodl portfolio consists of 80% ( or more ) of your total crypto holdings, kept in very stable and safe coins with large market capitalization and bullet proof fundamental use cases and naratives. Our granny has built this portfolio using monthly DCA ( dollar cost averaging ) without even looking at the price of the coins she was buying. This way she has patiently and methodically built up her “base” where the future rocket of risky altcoins will be taking off from. If you think that Dollar Cost Average doesn’t sound sexy, you’re absolutely right. It’s tedious, boring and unrewarding. But again this work ( even if put on autopilot of one monthly purchase at a time ) is what eventually will guarantee the peace of mind we all crave.
When all of our friends are suddenly dabbling in the financial markets, we feel the urge to join the party and jump head first into the black hole that we know nothing about. Take it from granny Sylvia. She has seen her fair share of greed and overly enthusiastic, caffeine pumped young men and women committing the same crimes against the financial history time and time again. Anyone who tries to teach granny Sylvia a quick lesson on “making a killing in the market” would be promptly advised to take a long journey towards self fornication, since her rebellious spirit of the 1960 is alive and kicking. Not even a whole platoon of avocado-sandwich munching, electric scooter riding self made trading geniuses can rival a solid and prudent strategy of a decent HODL portfolio.
When the time of major temporary correction will finally arrive and the markets will get wobbly, the fear will take over and all the “influencers”, financial advisors and overnight successes will scatter like cockroaches. Hot and exciting coins will lose 40% of their value once more and the whole space will once more transform into a boiling cauldron of emotions for a few weeks. These market corrections are completely normal, but scary as hell! Our granny Sylvia won’t even be around to witness it, because she’s too busy harvesting blueberries in her yard. She will simply take profits when her holdings will hit her desired targets and she’s ready to wait very patiently until it happens. Let’s take a look into her conservative holdings as an example.
Top 5 HOLD coins
Before mentioning the 5 usual suspects of our granny’s hodl portfolio, it’s important to mention one small detail. All of these coins are considered sacred and will never be used for any trading or exchange activities. They will sit patiently and grow in value over the long period of time, guaranteeing our precious peace of mind.
Bitcoin is off course the big daddy of all the cryptocurrencies and it shows! Granny Sylvia is fully aware of the limited supply of 21 million coins and the 4-yearly halvings of this digital gold. She also knows that even if all the millionaires and billionaires in the world COMBINED would want to own a piece of Bitcoin, they could only own about 0.36 Bitcoin EACH. This is why Bitcoin is making up a whopping 30% of her hodl portfolio.
Ethereum is a game changer that no doubt will be a huge part of our lives. It’s a breath of fresh air and a welcoming new paradigm of DAPPS, smart contracts, NFT’s and other important innovations. To our granny, Ethereum can be compared to the internet itself and this is why it’s making up a respectable 20% of her holdings, no matter how high the current GAS fees are at this moment.
Chainlink is the pathway by which the blockchains can communicate with the real world. It’s a no brainer for our granny, since she remembers the rise of cellular communication and the internet in general. The aspect of interoperability and the narrative of blockchain oracles makes her comfortable holding a nice fat 20% part of this already large coin. Besides, the 2nd narrative of DEFI would have a very bad time without this crucial piece of blockchain infrastructure.
Polkadot is a new kid on the block, yet our granny is confident. She knows that success is determined by people. Since the inventor of Ethereum’s programming language ( Solidity ) is now working on Polkadot, she can confidently allocate a well deserved 20% of hodl portfolio towards this newcomer. Aside from the people, Polkadot has never advertised to be an Ethereum killer and our granny knows that cooperation always yields better results in the long term.
Monero is mainly an insurance policy. Our ever so prudent grandma Sylvia knows that we must always expect the unexpected. After all nobody cancelled wars, financial crises and good old political tyranny. Therefore just like an old cigar box filled with gold and silver coins, Monero will make sure she will always have a private and fungible means of payment, no matter what politician takes the reins of visible power. A prudent 10% allocation in Monero brings a smile to her face any day.
Now you’ve seen all the hanging laundry, don’t go scatter into the wild just yet. Let’s take a deep breath and gaze within ourselves. Don’t worry, we won’t get overly philosophical or psychological at all. Again we’ll simply look in the mirror and ask ourselves a few important questions that will help us later on.
Pathology of an investor
Yes we have to be a bit insane to dabble in something as dangerous as the cryptocurrency market. Back in school nobody has even taught us how to do our taxes, let alone invest our money in a smart and prudent way. Have no fear, because the granny will come to your rescue and most importantly, she’ll even bring freshly baked cookies and milk to calm your nerves.
Today most of us have the patience of a tik tok video and the attention span of a goldfish. We want the FAST result and we can’t afford to lose a single day. This is exactly what will get so many traders and investors rekt in the process. People tend to “take revenge” on the market when a trade goes against them. Oftentimes they will even go as far as using their sacred HODL portfolio in the process. This is what our granny tends to avoid. You see, her hodl portfolio is truly sacred. She won’t touch it no matter what. For occasional gambles and “hot tips” from the grandkids, she will gladly use her 20% allocation called: play money.
Using the 20% play money, she can dabble in lower cap coins with solid fundamentals without having to worry about any potential short term losses. She can safely buy ZIL, GRT, TYC, BCH, LTC, XRP, XOR, DOGE and many more coins, just one small nibble at a time. All of these assets are held in a separated portfolio ( that can even live on a centralised exchange for convenience ), while the holy 5 hodl coins are safely stashed away on a hardware wallet with bullet proof passwords and carefully noted seed phrases.
Knowing your own spirit and character and being aware of your weaknesses is the first step towards winning. If you can’t help yourself, keep your hardware wallet under 2 meters of dirt if you have to. Do whater you can in order to protect your hodl portfolio from irrational and hasty action. After all, the mistakes that are made today will cost you 10x or even more tomorrow. This is exactly why you must always keep the example of the granny in front of you when dealing with crypto. Granny Sylvia doesn’t care about trivialities and quick gains. She plays the long term game and she only spends time doing her due diligence once, never to be bothered by market volatility, fear and greed again.
Only when her OWN targets for cashing out have been reached, she will slowly start to take some profits off the top. Life is made to be lived to the fullest. This is why it pays to be honest with yourself and treat your hodl portfolio as a sacred artifact made to be admired only a few times per month. Stop for a moment to let the words sink in… Now that you have found your inner-investor, let’s check out the last tip that our granny kept for dessert.
Chicken grill principle
These days we are all suffering from what’s called; analysis paralysis. We spread our mental energy too thin and way too far across the neverending sandwich of the crypto news and updates. Our phones are ripping at the seams from countless notifications. Our computers are a breeding ground for parasitic emails, tweets and videos. There’s so much mental energy that’s being wasted on trivialities that won’t add to the bottom line in the end of this bull market.
A chicken grill won’t switch off until the bird within its walls is nice, crispy and fully cooked. Yes it will drive you crazy with the epic smell of the upcoming feast, however you train yourself to WAIT until the timer finally rings. This is exactly what our granny is doing with her hodl portfolio. She did the research, consulted knowledgeable people and bought her crypto well in advance while all the news outlets were issuing the next Bitcoin obituary. There are 5 nice chickens slowly spinning in the grill as we speak. And the longer they cook, the better they will taste in the end.
The tasty chickens will swell up with news and FOMO ( fear of missing out ). There will even be explosions of fatty juices ( such as partnerships and even large institutional investors entering the market ) along the way. Nevertheless, the granny remains stoic and patient until the timer pings with the next price action and she will slowly start to take profit from this long and tedious journey.
That being said, don’t ever mistake this patience for weakness. Our hard rocking granny still pulls fast and risky gunslinging trades with volatile and dangerous coins! However this is being done with just a SMALL part of her “play money” and this allows the trader to take calculated risk without having to throw your underwear and wrist watch on the poker table. A solid HODL portfolio will ensure calm and steady nerves during this rollercoaster ride of a market and it will put you in the small minority of traders and investors who can actually sleep well during this exciting time and even years to come.