A Simple Yet Effective Strategy for Building Your Crypto Portfolio

In investing the key to success lies in a well-thought-out strategy. While we’ve had some excitement in the crypto space this quarter, it's clear we're still in an accumulation phase. This is a crucial time you to build your portfolios in anticipation of the upcoming bull market. Let's explore a straightforward, four-step strategy to effectively construct your crypto positions.

Step 1: Create a Buy List

You’ve identifies some tokens you have a strong thesis for, great! Don’t just blindly FOMO into them. Utilize tools like Trading View to craft a personalized list of cryptocurrencies you aim to accumulate. Organizing these tokens by sector or market cap size (small, mid, or large) can offer clearer insights and help you swiftly monitor and build positions in areas that align with your interests. This is key to tracking the overall performance of your portfolio and deciding when to buy and sell.

Step 2: Create a Journal

Documentation is key. Maintain a journal (I use an Excel sheet), to record your investment thesis, invalidations of that thesis and a defined time horizon. A comprehensive SWOT (strengths, weaknesses, opportunities, and threats) analysis is vital as well. This journal serves as a reference point, aiding in making informed decisions, especially during market volatility. It's a tool to check against emotional impulses, ensuring that you hold or even enhance your position if your investment thesis remains intact.

Step 3: Set Your Accumulation Levels

The next step is actually building your positions. Avoid the trap of FOMO (Fear Of Missing Out) by adopting structured investment approaches. Two recommended strategies are Dollar-Cost Averaging (DCA) and Buy Zone Accumulation.

1 - DCA (Dollar-Cost Averaging)

This method involves investing a fixed amount into a chosen token at regular intervals. For example, if you plan to invest $5000 in Token X, you might opt to purchase $1000 worth of it each month for five months. This timeframe and amount can vary based on personal preferences, the specific token, and market conditions.

2 - Buy Zone Accumulation

Ideal for tokens in a consolidation phase, this strategy involves analyzing the token's chart on a higher timeframe, such as weekly candles, to identify the consolidation range. Set a green buy zone near the support line, a yellow zone near the mean, and a red zone near the top of the channel. Aim for purchases in the green zone, using limit orders to automatically buy at these levels. You will often see a candle wick down to the support and immediately bounce back up. If you have limit orders in place you will be able to take advantage and build positions at a better cost basis.

Step 4: Keep Some Dry Powder

Reserve a portion of your portfolio in Stables. This enables you to capitalize on new and promising projects, which often exhibit strong performance. Newer projects tend to build upon their predecessors, offering improved products, generating hype, and typically facing less sell pressure. While older Blue Chips still offer great returns and are lower on the risk curve, new projects often out perform if you want to chase those 20-50-100x wins.

Conclusion

This four-step strategy offers a structured approach to building a strong and diversified crypto portfolio. It emphasizes research, planning, and disciplined investment practices. By following these steps, you can navigate the crypto market with confidence, making informed decisions that align with your long-term investment goals. Remember, the key is to stay informed, remain patient, and avoid letting emotions dictate your moves

A (long) introduction from Eric Muschinski, Founder of Phenom Ventures

BlockBuzz™️

Quick Hitters from the week

• Barry Silbert and Mark Murphy Set to Depart Grayscale Board: Both to step down effective Jan. 1, 2024, marking a significant change in the company's leadership.

• Changpeng Zhao's Roller Coaster Year: Despite legal turmoil in the U.S., the Binance founder's net worth skyrockets by $25 billion, landing him as the 35th richest globally.

• Mt. Gox Creditors' Long-Awaited Relief: Reimbursements begin after nearly ten years, bringing closure to one of the most infamous crypto sagas.

• Paxos' Green Light for Solana Expansion: Receives New York regulatory approval to introduce USDP stablecoin on Solana, set for public access on Jan. 17.

• Circle Catches France's Crypto Wave: Bags conditional registration for digital asset services, following Coinbase in a rare double license bonanza from France – seemingly a 2-for-1 crypto license deal!

• Solana Overtakes Ethereum in DeFi Arena: Meme coin frenzy catapults Solana's DeFi volume past Ethereum for the first time, marking a significant shift in the crypto landscape.

• Shiba Inu's New Domain Venture: Plans to launch custom .shib internet domains, blending the worlds of memecoins and digital real estate.

The Twitterverse

A collection of the most interesting stuff on Crypto Twitter this week

WAGMI

For the Crypto Culture

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.