Crypto assets investment strategy
Long term moves, based on buying dips during bear markets, and play them during bull market pulls. Accompanied with a focus driven in a couple of sectors within crypto trading.
By José Ignacio Blavi Aros
Key points:
Content: 1. Entry strategy 2. Our mastercode 2.1. Investment ratio in the portfolio 2.2. Market analysis 2.3. Sophisticated tools inside 2.4. Deep study of companies in play & our experience 3. Exit strategy 4. Crypto assets specialization 1. Entry strategy: At Blockchain Room, an entry strategy is more important than an exit strategy: because the core of our venture is based on our vision of long term output on cryptocurrency. In general, we are aware of the tremendous volatility, so we are risk adverse from quick profits that try to hit the peak of the pump and then exit the play, our vision is long term within the whole space. This long term vision, is centered on a deep research that comes from our team, who is submerged 24/7 in the industry, from different angles where we work with companies for their implementation strategy of their blockchain solutions; as well we bridge companies who develop blockchain networks with companies who understand its strategic priority and are starting to build a solution; and we enhance companies co-working their marketing/ communications/PR programs around their blockchain implementation. All of what contributes in giving us a true dip in our field research. 2. Our master code for trading/investing is based on the following: At this stage we are in the last face of this bear market, and we have a global crypto market cap of 2.46 trillion USD, and a conservative target these days is to get to USD 10 trillion. And our strategies are based on that general prediction. Once we get to that target, we can reevaluate to add new perspectives to our strategy, as that’s the entry to the bear market. Bitcoin will get to that point first, and a couple of weeks later the alt coins. For then we need to build strong stablecoin reserves. At that stage, learning from the past entries to a bear market, gaming has surged, with all its economy, not only in usage and trading of assets and NFTs, but new developments as well. This because the attention of most of the industry actors dissipate from the market and goes into entertainment, specially their online games, making it the only crypto space that surges even in bear markets. The other space to look for is blockchain for storage. 2.1. Investment ratio in the portfolio: We envision your portfolio in crypto as a savings account with a high yield. So part of the strategy is to have a continuous monthly deposit. This strategy serves to have a sustainable way to buy in dips in the market, that offer an opportunity in positions we already hold in a specific company. We aim to have 70% of the portfolio in long term plays in companies with seasoned founders, and a valuation beyond an initial pump, that have had an incremental growth in their tokens value, normally reaching a first high after months in the market. This because it talks about a price valuation beyond just marketing, but a consistent improvement of the stage they are set. Going away from pumps and dumps, and inflated prices because of joint venture or marketable news. When there is mass fear in the crypto space, DCA (dollar-cost average), on the way down during dips using a percent of the monthly deposit. Always have reserves in stable coins ready to go, and never exhaust resources on a single period, or few dips, unless its something like a market crash we had in march 2020. Buying a peak prices or during mass greed, rarely workout in the short term, although with the correct cryptocurrencies, when the right company is identified at that stage, it can work out well in the long term, as it really generates value, as buying SOLANA and 50USD in May 2021. Most big dips happen and recover between hours, so to avoid losses whenever one is not in front of the screen, to not miss the bottom of most dips and take advantage of the technical information we have in hand of the companies we hold positions, we set limit orders at low prices where we are happy to accumulate. We will also stagger those limit orders, in case the price crashes further than expected. 2.2. Market Analysis We study the analysis of the most trusted private and public sources, listening what the market and experts have to say at every given point in time. That analysis comes from parties we have selected because of their influence; from blockchain company founders, advisors, and directors, to traditional media outlets, and new up-coming channels. All of which complements the data of financial reports, company assets, market share, and all we can get on their financial statements, as they are not publicly traded companies, and in most cases they are in a development face, so is harder to come by that data. Within the analysis work, what most individual traders miss (because of the irregular behavior that the crypto market has developed because of its volatility), is that the technical analysis, and how crucial is for when setting and recalibrating to meet targets planned. 2.3. Sophisticated tools in hand We use the most sophisticated tools available, today; from exchanges to various software like lunacrush, that allow us to see the long term view on the behavior of the public/investors about whole companies, or specific trends, in a very precise time, serving as an additional compass to sort the volatility inherent to this new industry. 2.3.1. Social intelligence focused analysis To get a better scope of a space and a company in it, we use “social intelligence”, and we understand it as the compilation and analysis of the summation of factors expressed by the conglomerate of individuals among a determinate spectrum we select for its following and study, who expresses what they want, feelings, and preferences; directly or indirectly, voluntarily and involuntarily, for the effects of such a study. With that the use of Crowdsense, Messari, Nomics, 2.4. Deep study of companies in play & our experience And third, the most important measurement of it all, the understanding of the companies real work, advances, and how it relates to trading their tokens/coins. This is the main way how we face the high volatility of the market, where our resources, investigation and technical knowledge of the tech industry, through our experience of decades in it. 3. Exit strategy: When the crypto space is in the high greed zone, and everything is already 5 to 10x in the past 6 to 12 months, this is when we consider the amount of profits we take out, on the way up. A very small % of people really sell at the top, so by spreading out sell orders and taking profits on the way up, we are more likely to catch bigger profits. Rather than waiting to sell the majority of it at a certain unrealistic price target. Doing this also increases our stable coin reserves, and adds to your buy the dip fund. Day traders may do this with a large % of their portfolio, but we are focused on more long term, so we do this with a smaller % of our portfolio, and have the majority of our portfolio in staking, lending, and other ways to earn passive income within crypto trading centralized tools. We also do limit orders on the way up, to not miss profits then as well. To ensure if a big pump happens, and it comes back down, you are able to lock in some at higher prices. In our small part of the portfolio, around 10% we focus on short term trading, we look for rocketing tokens where we can identify patterns on their way up and down, entering and exiting several times in their journey around their 400% to 800% (+ -). Looking for gains in their fibonacci sequence, or similar, anticipating the average % movement of each curve. https://youtu.be/d1wB5tuaP20 4. Crypto assets specialization:
From the 4 types of crypto assets; cryptocurrencies, security tokens, utility tokens, and stablecoins; and their underlying sectors; Gaming, DeFi, NFT, Launchpad, EFT, Metaverse, Storage, Fan Tokens, Layer 1/Layer 2, New listing. Due to the great depth, diversity and technicality, we choose to focus in the ones we recognize that have more potential of growth, and are resilient during bear markets. Having said that, there are opportunities all across the board, but focus is key to really understand the companies we engage with and hold positions in. It make sone submerge in their culture, speak the language, and truly understand the long term commitment. We focus our investment attention in DeFi, blockchain gaming and metaverse, NFTs, and a very small % of our focus goes to new listings of companies which must comply with a set of parameters, like an experienced team of founders. 4.1 The environment of the crypto assets: WEB 3.0 Web 3.0 is the integration to the current online database of another type of network, blockchains. But in broader terms, refers to a decentralized system of communication, that incorporates in its processes all of these new elements and protocols called crypto assets. In this decentralization, the core feature that disrupts todays WEB, is ownership: property rights in the web, of web assets. But, companies, and even brands find themselves at a fork of how to maintain its value when their new competition is decentralized, even at their ownership level. 4.1.1. How companies today can switch to a decentralized system, or find ways to embrace WEB 3.0? In our current system this is nothing new, when a company grows to a given point, it has the option to go public, following some rules and steps to do an IPO (initial public offering), and those shareholders have rights, and even vote in matters of the company’s steak. The challenge now, is that point in time a company can go public is at the moment of inception, in the form of ICOs (initial coin offerings). The change inside of these companies using blockchain technology, in many occasions is as a feature, and the point is to give the chance to the users to interact with your product, service or part of the process of your company, allowing them to be part of it. So, how do you allow people to be part of a process of your services beyond than only as the consumer? Most of the real growth hacking tactics understand the need of the product to internalize the connection with the consumer before the product is even created, creating dependencies and ties in one another. WEB 3.0 allows that in a more standardized way, as beyond the creativity one company can have behind the connections made throughout their value chain and/or product/service, at the WEB 3.0 all organizations can reach that level of penetration to their communities/audiences through DAOs or crypto assets. 4.1.2. How fucking real is WEB 3.0 as a displacement of today’s WEB Besides the general understanding of the decentralized apps that run in different blockchain networks, and their slogan of giving power to the people (communities) around those product/ services in those apps, the question is what has fueled its movement forward in time. Meaning what are the interests of ... 4.2. The gaming space From October 2021, when the gaming market cap was at 1.7 trillion the gaming industry will be exploding beyond what the whole other spaces in crypto will be gaining in the next 2 years. That is getting into ventures like Illuvium, which to end of October has reached +1000X The key to entering in plays like that is to research for indy gaming, in how their teams look. What games have they developed in the past, because this is not something new: the blockchain functionality is a feature of the venture, it isn't the game itself, and we want to find good games that will build up a big following, and that comes from experience game developers, not blockchain focused development. Good game developers from the past, will be the ones that develop the best crypto games. There is no real reason for these ventures to be launching coins or be selling NFTs, if there is not even a beta available. When we dive into the research of the ventures on gaming, +90% of the ones that were successful early on was based on the art: and that refers to actual screenshots of the game, and not just beautiful imagery, images of the NFTs, drawn pictures. A good example is “Big Time” The other important axis to incorporate is the early stage valuation to be flat for a very long time from the moment the coin is released. So when we look at a graph of the coin price, we want to see a minimum increase in its price for the first year, as the games take years to develop, and there should not be fluctuations on the time there is not much to see of the development. Whenever we see big pumps on the coin price on an early stage, we relate it with a rookie team, who uses all the marketing tools available to throw attention to the venture, and the price get inflated beyond any reasonable/realistic expectations of the following it could end up having. In these sense is better to look for guild of developers, or studio game developers who have developed indie games. Because most studios that are new in gaming applying their blockchain knowledge to it will not have a triple A game out. Within the game itself, we want to understand if there is a good, very defined game-play-loop: whats going to trigger dopamine and get people hooked. And what needs to happen there is look for a complete loop that incorporate blockchain technology (the crypto functionality) is placed in the game in a smart way that is going to carry an underlying economy; or be using the NFTs or the crypto tokens tied in the dopamine feedback loop. So will be games that have play to earn functionality. From the game itself we need to look for a clear scope of what the venture needs to make the game work, and time is one of the key factors. Amazing games take 5+ years to develop. So we want to look for the qualities described before that are input in a very simple game like Axie Infinity, that has an achievable scope that can be done in just 1 or tops 2 years. So we look for great gaming loops and limited scope. DeRace is a perfect example as well, as too Snoop (snake game). Reference: Have a look at a site called Learnbrite.com - augmented reality with no requirement for headsets http://Learnbrite.com 4.3. The NFT play Most have related NFTs with the art world by online pieces, and criticize its simplicity vs value, pointing out is just a fad, because the growth it has had resembles as the one of pyramid scheme, where the techniques of “growth in value” of a given asset are set by the delta we leave as profit for the next holder in the interexchange of property of that asset. That extreme speculation on pricing, gives an inflated/overvalued standard in this whole crypto asset class, but is good to understand that the same happens with emerging artist that are promoted by centralized distributors around the world, but in a lower level, because in the crypto environment, the barriers of entry as a player in the game are lower, and that atomization of the parties is being feed, at this stage, by quick trading and profiting, and we see personalities in youtube and Hollywood using their following to create this NFT assets to sell them to their community, similarly to what the same type of personalities did in the .com building sites they backed with their names, not serving any higher purpose of what a regular blog does today. So, is important to understand my “modo”: lets work for the long term. Meaning we need to look for artists with a good following, that are vocal and present constantly online, and understand the “process of art creation”, as the finished art piece will always be subjective to be liked, but its creation and transformation is what makes a banana ducked taped to a wall, or a simple graffiti in a public space, really valuable. But, thats all what we see at a simple glance, and an NFT is way much more than that: Welcome to the most important step into the realization of a real world in the clouds: NFTs, the owning of online property, online. (This could be the name of our next book, haha) 4.3.1. The forth wave of integrating a real world in the online world: Internet vs Real World First wave: From the beginnings of societies, people have gathered around a center: a place that turned gradually into their “town square”, and at the beginnings of the internet, we found people doing the same builing sites to connect and share opinions. From to blogs and big social network platforms. Second wave: Those same people created enchange places, where people would travel to exchange whatever they produced or recollect, and people in the internet have done the same with big market places. Third wave: And also created places where to have fun, districts addressed full on to entertainment. What we have created online with Netflix and the gaming industry. Forth wave: But until now, the internet have not been ready to develop a huge component that pushes all in the real world, and is personal property and ownership. Have you ever been threatened by facebook instagram or an equivalent to limit the access of/ to your account because of your behavior, posting photos that don’t comply with their norm, even threatening people with deleting their whole work/memories/profiles from their servers? Do you remember of windows e-book reader closing down, deleting all books purchased by users from their devises? Most of our interactions, and creation of our extended personalities online are based on a model of licenses, where we dont own anything of what we “are” online. But this have come to an end, with the creation of actionable ownership through NFTs. To own something seems very clear and simple, but is and has been a deep matter of law (coding) over centuries, across cultures, how do you own it when you are using any sort of derivatives over that property in a market? That door has been opened for organizations integrating blockchain tech, and its first space embracing it properly will be gaming, where we are buying things beyond its use in a specific game, but even if that game closes/ends I can take it to another one, thanks to what is currently being developed around interoperability systems, and protocols (laws). 4.3.2. The future of NFTs and property rights We are exiting a moment in time, where our online presence was a “license” to interact with the content we create and use in different networks/platforms, to a model much like the real world, were we can claim different sorts of property rights over the things we create, interact, and purchase online. There is the emblematic case of a person who bought 2 million dollars in gaming assets in a specific game, to realize after a law suit, that he didnt owned any of what he purchased. With NFTs and what companies like Polygon are doing around interoperability of blockchains, we are able today to purchase online assets that truly belong to ourselves, and we can take them with us to whichever platform, game, or environment we want to throughout the online world, and even beyond that, as there are some of those properties that are linked with assets and/or benefits one can have in the real world. But this raises a few core questions: what is property; what it means we can own something online; what are its limitations; whats the difference of property having online rights vs the same property having real life benefits and rights; and what is the definition of real? Before we enter in that legal conversation that takes us to the world of philosophy and even metaphysics, lets dive in to the opportunities and early stage we are set for the interexchange of this property rights: NFTs today. As this new environment is being planned, there are players that are leveling the ground for us to play in, is clear that Etherium with its efficiency is a great background, but the fees to make those exchanges make them prohibited for most today, so there have been a few great initiatives like Metis, Polygon, and Solana (among others), that work on lowering the costs of transactions within an Etherium based blockchain, and solving the interoperability issue, that allows us to have property moved around with us, letting us use it and exchange it through different systems and environments. So, the opportunity and challenge we face today, is to identify companies that at its core can tackle this, allowing new players to emerge to use their systems and protocols, to then allow us to truly have full property rights over online crypto assets. 4.4. The Storage space https://threefold.io/ A bit like Chia Network https://arweave.medium.com/what-is-arweave-explain-like-im-five-425362144eb5 https://oceanprotocol.com/ QUOTE - Developers use Ocean libraries to build their own data wallets, data marketplaces, and more. Ocean datatokens wrap data services as industry-standard ERC20 tokens. This enables data wallets, data exchanges, and data co-ops by leveraging crypto wallets, exchanges, and other decentralized finance (DeFi) tools. Check NiceHash NiceHash network, is an exchange where people buy and sell mining capabilities, and link the gains to your wallet. https://rugdoc.io/ https://shop.deeper.network/ Thats the product https://www.deeper.network/ Thats the blockchain network 4.5. DAOs as an organizational system
A DAO can be a powerful tool when rolling out oproducts, and brands and organizations have now the opportunity to engage with their audince in a profund way, even through ownership, rewarding the contributions a community gives to a certain project. Welcome to the future of management! Lets think on how a vending machine works, and how their processes are extrapolated into a traditional organization. The added complexity comes when we take the board of directors in a regular company like apple, and how they vote for general paths the company will take. in a DAO, there are no CEOs its governance its given by the votes that are assigned to its tokens, but its management is given to the software, and it will regulate the processes according to the general instructions given to perform its routine operations. DAOs can continuously improve and grow, just like people. As token holders can vote on where it should grow, and what it should improve. And as we said, every token is a vote, and whoever holds more tokens has more power to vote. The value of the organization based on a DAO is given by its tokens, and in its most simple form, if a vending machine is tokenized and governed by a DAO, their tokens will have a higher value if it is selling more. In this sense, if a DAO emits a limited supply of tokens, it becomes a deflationary crypto asset, and that mixed with the expectations of growth and the real impact it has in business, give the DAO the core elements of valuation and price fluctuation of its tokens; and at the same time it gives more value to hold a token of a DAO compared to other types in the market. The most important benefits are its trustless/safety and its impermeable to 3rd parties to shut it down. Another benefit that is as well a downside element is being an open source software, what gives the opportunity to attackers to penetrate the network (in the case the attackers know in depth how the network is structured, they can reverse engineer a way to penetrate it). Another downside comes for businesses that have processes or elements that are secret giving them a competitive advantage in their market. This because a DAO is an open source software/network, so it makes it very hard to build secrecy. The issue today is that a DAO is like an LLC, so you dont invest in an LLC, not because you have a community, you should start a DAO, because you actually need to solve something, and not just look for building value of a token that has no economic value, because it doesnt solve anything really. Its a different class of asset. |