Portfolio management – Dollar Cost Average strategy edition 4 =

Disclaimer

AllesOverCrypto likes to let people speak about their crypto adventure. From this initiative I suggested starting a guest blog series here on the website. It is important to know that I do not work at AllesOverCrypto and that everything you read in this blog is only my personal opinion and this is separate from AOC.

How is the market doing

It has been an eventful month for all crypto investors. The fall of FTT exchange has been a devastating blow, perhaps even more violent than the fall of Luna or Celsius. Their own token (FTX) fell by as much as 67% after news came out that Binance does not want to take over. The reason that Binance is renouncing the deal is that FTT has a black hole in its balance sheet of no less than 8 billion euros. This indicates that there has been considerable mismanagement of their assets and those of their customers.

The consequence of this blow is that millions of users of the FTT platform no longer have access to their assets. These assets are frozen because the company is experiencing liquidity problems.
This is a huge blow to the general confidence that we are trying to achieve with crypto, first Celsius falls and now FTT, this will be felt in the prices of crypto for a long time to come.

Now that the dust has settled, we see that Bitcoin had found its way up at the beginning of the month, due to a potential partnership between Google & Solana. The reason I mention this is because Solana rose about 27% after the news, however one of the largest investors in Solana was FTT and the price has since dropped from € 38 to the now € 12. When the news came out about FTT I immediately sold Solana to limit the damage, I will come back to this when discussing the portfolio.

The feeling

Sentiment given the FTX debacle is still very low. We were at a score of 20 from Fear&Greed last month, now we’re at 23. A very small win.

You may now wonder how it is possible that sentiment has turned out slightly higher despite the crash, I will explain this in more detail on the graph below the Fear&Greed image.

 

 

After months of disappointing Consumer Price Index (CPI) data, things have finally turned out better than expected . We saw this briefly in the price of Bitcoin.

Despite the fact that this is one month that is not too bad, it is a very hopeful report, which makes me a bit enthusiastic. Inflation is still much too high, of course, but this is the first indicator that it may have come to a halt after all and we may be on our way back to more normal levels of inflation. We are all waiting for this.

I am not trying to say that we have now peaked in terms of inflation, but it does show that the measures they have taken so far are having an effect, as the report shows. So cautious optimism!

 

 

Liquid stock

When I look at the liquid supply, I actually see the opposite of what I expected. My expectation was that there were many investors who sold their Bitcoin quickly. However, I actually see exactly the opposite happening in the graph, a lot is being bought at these prices, which is of course very positive. The ultimate game of Bitcoin is that the asset itself becomes so scarce that the price has to go up, because stocks on trading platforms are so low that investors have to offer more to buy Bitcoin.

 

 

 

Technical analysis

In terms of technical analysis, we are still below a critical support level. The 200 Weekly Moving Average (orange line) shows the average price of the previous 200 weeks. On average, the current price is therefore still far below that.

 

On the second image we see the price history of Bitcoin, here I notice that previous halvings (blue vertical line) where we were below 200 WMA have always been a very good buy indicator.

 

Should history repeat itself I can expect a x10 or maybe a x15 of what it’s worth now. Of course this is speculation because we never know for sure, but when I look at past halvings we see that the price always finds its way up. As I have already described in a previous blog, I do not want to make it more complicated than it is in terms of technical analysis, I look at what has happened in the past and whether I can take a good risk / return on this, on this right now that’s a yes.

It could of course take a long time, the next Bitcoin halving is not until 2024, which is still very far away. That’s exactly why using this dollar cost average strategy, no matter how good or bad someone is at trying to predict, we never really know for sure.

The portfolio

Unfortunately, the portfolio has taken a good hit due to the fall of FTT. So I sold Solana’s entire position to buy more Bitcoin.

The reason for this is that FTT is Solana’s largest shareholder with no less than 50 million coins. If this has to be sold to close a gap, it will have a very negative impact on the price of Solana, so I acted immediately to be ahead of the crowd and sold it at a price of around 18 euros.

For the rest, the portfolio is now 15% negative, at the start of this DCA strategy the price of Bitcoin was around 29000. This is a drop of 43% on Bitcoin alone at the current price, so the damage is still reasonable. this is because we have spread our purchases well. I also managed to sell Cosmos high and also sold Solana relatively well. All in all, I am certainly not dissatisfied with the result given the market conditions and I am waiting for better times.

 

 

If you want to know more about who I am or what I do, check out my website.

If my investment strategy appeals to you, copy my crypto strategy via the Iconomi platform.

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