Portfolio Management – Dollar Cost Average Strategy Edition 4

Disclaimer

AllesOverCrypto likes to let people talk about their crypto adventures. Based on 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 going?

It has been an eventful month for all crypto investors. The fall of the 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 the news broke that Binance does not want to take over. The reason 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 significant mismanagement of their and their clients’ assets.

The consequence of this strike 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 big blow to the general confidence that we are trying to gain with crypto, first Celsius drops 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 start of the month, due to a potential partnership between Google & Solana. The reason I mention this is that Solana is up about 27% after the news though -one of the biggest investors in Solana FTT and since then the price has fallen from €38 to now €12. When the news broke about FTT I immediately sold Solana to limit the damage, I will return to that when I discuss the portfolio.

The feeling

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

You may now be wondering how it is possible that sentiment has gotten a little higher despite the crash, I will explain that in more detail on the graph below the Fear&Greed image.

After months of disappointing consumer price index (CPI) data, it’s finally here better than expected. We briefly saw that in the price of Bitcoin.

Despite it being a month which is not too bad, it is a very hopeful report which makes me a bit excited. Inflation is of course still far too high, but this is the first indicator that it may have stalled after all and we may be heading 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 shows that the actions they have taken so far are having an effect, as the report shows. So cautious optimism!

Liquid storage

When I look at the fluid 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, which is being bought a lot at these prices, which is of course very positive. The ultimate game with 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 for the previous 200 weeks. On average, the current price is therefore still far below that.

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

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

Of course, it may take a long time, the next Bitcoin halving is not until 2024, which is still very far away. This is exactly why using this dollar cost averaging 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 quite a hit due to the drop in FTT. So I sold all of Solana’s position to buy more Bitcoin.

The reason for this is that FTT is the largest shareholder belongs to Solana with no less than 50 million coins. If this is 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 43% drop on Bitcoin alone at the current price, so the damage is still reasonable. is because we have spread our purchases well. It also managed to outsell the Cosmos and sold the Solana relatively well as well. All in all, I am certainly not unhappy 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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