One of the best things about having fully deployed every single dime I could find in the markets, is that I am no longer constantly stressed about the daily movement of crypto prices, as there is not a dollar more that I can put in. There are no more credit lines I can tap, no more loans any sound financial institution would provide, and certainly no more idle cash sitting around that I can put in.
My fate is now entirely in the hands of the universe, and now, we enjoy the ride!
I figured a regular weekly weekend update on the portfolio could be fun. If you ever come across on CNBC that Bitcoin is down 50% in a day - you know you’re in for a treat come the weekend!
Portfolio Allocation - Cost Basis
Before we go into the fun part of this week’s update (returns! losses!), it is probably best to have a summary walkthrough of my portfolio at cost basis. My portfolio allocation at cost are as follows, in order of largest exposure to smallest:
Ethereum makes up 44% of my portfolio at an average cost of $4,045
Cardano comes in second at 16%, with an average cost of $2.06
Polkadot at 15%, with an average cost of $47
And Solana rounds up the top 4 positions at 14%, with an average cost of $191
Outside the big 4, Polygon makes up around 4% of my portfolio, with Bitcoin making up another 3%
If this is the first time you’ve heard about my allocations, the one thing that always stands out is the low Bitcoin allocation.
My strong belief is that while Bitcoin plays a vital role in the crypto market as the proof of concept for digital assets, most of the returns going forward are going to be made in the ecosystem as opposed to the gold standard.
For example, I look at “layer one” solutions such as Ethereum and Solana as the operating systems of the new Web 3.0 world, and there is much value to be unlocked given the nascent developments in the space.
Ethereum has really only gone through one market cycle so far as it only started in 2016, just before the last market cycle peak of December 2017, while Bitcoin has gone through three distinct cycles and have already generated returns in the millions.
I also believe there is much more room to grow for price discovery as Ethereum is clearly the number one network today that has the most number of developers actively building tools and programs. When you hear others in the news talk about DeFi (decentralized finance) and NFTs (non-fungible tokens), those are almost entirely built and ran on Ethereum.
Coming up a close second in terms of network adoption is probably Solana. Many have described Solana (and others) as a Ethereum-killer. Developer activity is high on Solana, and some of the same applications that are being built on Ethereum are migrating to Solana because of how high the “gas fees” are on Ethereum today (think of “gas fees” as payments you have to make for executing a transaction on the network).
What Solana makes up for in low transaction cost, however, it losses out in terms of decentralization - which is a hallmark of the crypto market. It remains to be seen if Solana will weather the next bear market when only the die-hard fans of crypto remain, and Solana’s more centralized nature may rankle some folks in those camps.
Portfolio Review
Now for the juicy part!
Given that I’ve fully deployed my capital by the first week of November, it is fairly easy to calculate returns as I’m not adding new capital in every week that may distort the numbers. There is simply no more money left on the table here.
Leverage
A quick word here about leverage.
As you may have read in my original post, I have taken out multiple loans and drawn down my credit lines in order to ramp up my exposure to the markets due to my strong belief that there is one last leg to this market cycle.
As a result, my portfolio returns should be read in the context of the leverage that I have taken. For example, my portfolio leverage is around 180% of my equity. Which means, for every dollar that I have invested in the market with my own capital, there is an additional 1.8 dollars that I have deployed with borrowed money.
In my updates, I will strive to distinguish between unlevered returns, and levered returns. Unlevered returns being returns I would have made if I had not had the benefit of borrowed money, while levered returns refer to the returns (or losses) I have generated as a result of the loans that I have made.
Returns
As of November 14, the unlevered returns on my portfolio are +13.2%, while my levered returns are + 36.6%.
In absolute dollar terms, the largest contributor to gains in my portfolio is Ethereum ($4,720 as of 9pm ET), making up 55% of all gains, while the largest detractor or loss in my portfolio is Polygon - at around negative 2%.
On an individual token’s performance basis, the largest percentage gain in my top six allocation is actually Bitcoin. Bitcoin’s price ($65,930) is up 37% from my average cost basis ($48,080), but because it is only 3% of my total portfolio, it made up only 9% of my total portfolio gains.
Because I had bought Bitcoin much earlier in the market cycle (during the depths of the summer lull), and I had bought Ethereum all the way till November, that should be expected. Going forward, however, I do believe that Ethereum will outpace Bitcoin during this market cycle, and we should see this timing advantage dissipate over time.
End Notes
I hope this was a helpful update and takes you along the journey as I navigate the markets. While the first portfolio update is firmly in positive territory, my guess is there will be ups and down along the way, which will probably mean it will be quite entertaining watching me ride a rollercoaster of emotions.
Till next time…!
web3doggo