MARKET PEOPLE

【Woody's Column】How to Start Fresh in 2021? Create a Cryptocurrency ETF with $100,000

2020/12/28

This article is authorized for republication by the author Woody. The original title is "2021 $100,000 Self-Organized Coin Circle ETF." For the original article, please see link. It has been rearranged with permission.

Table of Contents

Review of Operations in 2020

Before discussing how to allocate ETFs, let's summarize 2020 first!

2020 was an eventful year. At the beginning of the year, BSV+BCH Note1 skyrocketed by $100 in a day. At that time, a fortune teller told me I would suffer significant financial losses, but I didn't believe it. However, it turned out to be true...

Note 1: BCH is a fork of Bitcoin, created in 2017 due to differing community ideals; BSV forked from BCH in 2018 due to differing ideals.

Note 2: "Buck" is a slang term for U.S. dollars.

Initially, the stock market crash affected the cryptocurrency market, shattering many people's illusions. Even I was in a panic in March, but fortunately, I reluctantly bought USDT at a premium to enter the spot market. When COMP Note3 began mining, I was not convinced until YFI hit $4000, at which point I bought in with a trial mindset, experienced the DeFi craze, and saw my assets rise to a new level.

Note 3: COMP is the governance token of Compound, a DeFi lending platform.

Another thing worth celebrating is my investment in BAND during the crypto winter last year, with a private placement cost of 0.4. My investment philosophy includes a "second place" mentality; when LINK dominated the market, I saw BAND as a contender, especially after its successful launch on Binance. I eventually sold at an average price of $12, considering it one of my most successful trades in 2020.

However, this was also my biggest failure. Back then, the oracle market was overheated, with almost everyone being bullish. I believed the oracle had peaked and decided to short it, but my leverage was too high. As per my risk management rules, I stopped out at the highest point. Those interested can find my post on shorting BAND in the community group, marking one of my biggest losses in the middle of the year.

Since Bitcoin broke out in late October, I was lucky to increase my position at the breakout, but I only took 2000 points before exiting. However, I held onto the spot market more steadily and participated in the market.

Recently, XRP has been my biggest loss this year. If I were to describe it, it would be at a level where my mom would want to kill me. XRP spiked, but historically, it tends to rally briefly and then decline gradually. I decisively shorted it, but my leverage was too high, leading me to stop out according to my rules.

Looking at my two failed trades in BAND and XRP, I entered at relatively high points. My mistake was having too much leverage, possibly due to this year's bull market. For 2021, if the market does not turn bearish, I won't short small coins or XRP-like speculative coins. If I do decide to short, I will keep leverage within 0.5x. Fortunately, the mainstream markets performed well towards the end of the year, recovering my losses and achieving a new high in performance.

For 2021, I am not overly pessimistic about the overall market. However, after the crash in March this year, I approach the market with caution as no one can predict it with certainty, and being careful is crucial.

In recent years, the end of the year to the beginning of the next year has typically been a relatively low point in the crypto market. This is because foreigners cash out during Christmas, and the Chinese cash out during the Lunar New Year. This year's timing is unique as Bitcoin recently hit a new all-time high, making many seasoned investors hesitant to enter. Nevertheless, new investors are entering the market, driven by QE flooding into various investment products.

Antiques, even NBA cards, have seen significant price increases this year. Compared to these collectibles, Bitcoin has the advantage of scarcity and better liquidity. This is one of the reasons why I am more bullish on Bitcoin.

I believe the altcoin season will arrive in the next 1-3 months. Bitcoin has only recently hit a new high, and new investors are still learning. Soon, newcomers will discover Ethereum and more altcoins, attracting external funds to cheaper altcoins. Therefore, the traditional portfolio of BTC+ETH may not necessarily outperform the altcoin group in 2021.

For newcomers, I believe that frequent trading may not beat the strategy of holding coins. Therefore, I plan to share an ETF strategy that involves holding coins without much active trading, earning both coin value and cash flow.

This ETF does not guarantee profit or outperforming Bitcoin. It is simply a personal strategy I am sharing. Similarly, I will invest $100,000 in this strategy, record my experiences monthly, make the records public for a year, and may adjust the allocation or not.

Self-Organized Cryptocurrency ETF Allocation

Now, let's discuss the allocation of funds:

BTC: 20% - Basic and essential given institutional entry
ETH: 10% - Essential for DeFi exposure
LTC: 10% - Recently outperformed mainstream coins, part of PayPal's quartet
DOT: 10% - Bullish on Polkadot's ecosystem development next year, supported by exchanges, but lacks a strong foreign community
BNB: 16% - Platform coin, must hold 500 for mining and IEO
FTT: 5% - Part of the "SAM triumvirate," with a trajectory like TSMC, hold 1000 for IEO
BCH: 5% - Part of the grayscale series, also part of PayPal's quartet
OKB: 5% - Popular exchange among Chinese traders, strong profitability, and weekly coin dividends
AAVE: 4% - Strongest lending protocol
YFI: 4% - YFI is currently a godlike figure in the market
SNX: 4% - Strongest synthetic asset protocol
CHZ: 4% - Potential to attract new investors next year, may capitalize on sports fans, unique project with tokens for mining or CHZ exchange's fan tokens IEO

Totaling 98%, with the remaining 2% flexible to meet platform coin holding requirements, with a total investment of $100,000.

Among BTC, ETH, BCH, LTC, YFI, AAVE, and SNX held in FTX for lending, BNB, DOT, and CHZ held in Binance for mining, and OKB for weekly dividends. This strategy is suitable for those who have been taken advantage of before. By diversifying investments, one can reduce the psychological impact of missing out and ensure participation in every rally.

If you have made a lot of profit in the market, congratulations, you don't need to follow my strategy. However, if next year turns bearish, don't expect this portfolio to make a fortune. This allocation is based on the expectation of a bullish market in the coming year. Let's look forward to how this strategy performs in 2021!