I wanted to give a quick update as promised regarding my selling activities. Due to the recent runoff in cryptocurrencies I decided to take some money off the table today but as I think there still might be significant upside then I trimmed the position by only around 13%.
As I do not see much long term value in smaller coins then I liquidated in full around 6, 7 positions in the market cap range of 100 million to 1 billion which had not brought much gain as well. In addition, I trimmed some midsized coins and Bitcoin. I actually also wanted to sell some Ethereum, but I found out that due to the staking in Kraken I can not sell with very favorable conditions as Ethereum is unique when it comes to staking. As I did not want to sell a huge amount anyway then I put it off for now.
What was left is the following state of my crypto positions.
As I am on it then I might as well explain my crypto strategy here.
In the left-hand side you can see the column “Ideal percentage”. That is calculated by dividing the square root of the market cap by the sum of all square roots of market caps and thus it was a kind of index. I almost never sold anything, so I was rebalancing with new purchases only. At one point when I was buying consistently every month the differences between the ideal and actual were quite decent but as I have not bought anything after August then the divergences between ideal and actual have grown quite big.
I did not want to spend time in doing research into the different coins, but I did feel that bigger coins have more potential. So I wanted an index which depends on the market cap yet a simple market cap index would not work as then the smallest positions would have been equal to 1 cent etc. This is due to the fact that the smallest coin I was holding was Gnosis which at the low point had a market cap of around 20 million. So I ended up with a square root market cap index.
At the moment I have no plans of buying more, only selling in case the prices rise even more. I would consider buying again once there is a significant drop in which case I would follow the index again most probably, but I will write for sure once I start doing that.
If you have any questions regarding parts I did not address or the ones I did then feel free to leave them in the comments and I will try to respond to them.
Stay tuned, stay awesome and stay invested
The Hobby Investor that could