I have written countless articles on my portfolio’s evolution, over many years’ time. As I get older, wiser, and more risk averse, it becomes increasingly obvious that the best way to survive – and if you’re lucky, thrive – is to understand what drives investors’ emotions, and how they cumulatively react to adversity.
In yesterday’s must read article, I discussed how the same reward/risk factors that drove me from mining stocks to bullion were what attracted me to Bitcoin in 2016; and consequently, when circumstances led to a more altcoin heavy portfolio in 2019, these factors drove me back to Bitcoin in 2020.
As of today, I am 100% invested in Bitcoin – encompassing two-thirds of my liquid net worth (the other third is cash); and given all I’ve witnessed, and my expectations going forward, I can confidently say it’s unlikely I’ll ever own an altcoin again. This is why I’m so thankful “airdrop luigi” wasted so much of his investors’ money buying up what will ultimately be a “sh-tcoin” for such exorbitant prices!
From day one, I have been as close to a maximalist as you’ll find, but circumstances led to an altcoin heavy portfolio during 2019. I learned much during this time, and carefully watched everything around me – with one of the biggest takeaways being, that essentially no real value has been created by the 5,000+ coins aiming to enrich their founders - and with a little luck, investors too.
When I look at the top 10 altcoins (let alone, the top 100), I quite literally see nothing of value. Yes, Ethereum has a role to play, but I don’t think it will ever be anything more than a facilitator of sh-tcoin creation – and given its unlimited supply, it’s essentially uninvestable irrespective.
Otherwise, pure garbage, across the board. I mean, BCash and BSV – two of the biggest scams in crypto history - remain the #5 and #7 coins; Ripple, which does NOTHING, and never will, #3; EOS, an Ethereum clone NO ONE uses and NEVER will, #8; and Litecoin, another completely useless coin, #6.
Yes, if another crypto-mania erupts, like in early 2018 or mid-2019, this garbage could again float. However, in light of the increasing skepticism the crypto community is having about altcoins, I believe the Coronavirus scare could kill off whatever remaining “immunity” sh-tcoins have to the reality of their uselessness.
Yes, some coins are down significantly already – thus, making their reward/risk profiles favorable despite the weak financial market outlook. However, I believe the same instinct that drove me to sell my Beam earlier this week (before Thursday’s market collapse) will spread through the crypto community like wildfire…and as well, mainstream financial markets.
In other words, I believe the rush to liquidity will be as powerful as anything witnessed in my 30 year career – which is why I expect Bitcoin dominance to explode this year, from 63% today to 80%-90% by year-end; perhaps, much sooner.
https://twitter.com/Andy_Hoffman_CG/status/1238826611241295874
- Andy_Hoffman_CG
Simultaneously, and quite rapidly, my views of Bitcoin dominance – not just price, but function – have changed, too. To wit, I have always believed nearly any new crypto technology will ultimately be subsumed by Bitcoin – including, for instance, smart contracts and atomic swaps. This was why MimbleWimble intrigued me, as the odds this amazing technology will be incorporated into Bitcoin are, due to technical considerations, extremely low.
However, starting with the recent revelation that Taproot/Schnorr will likely be soft forked into Bitcoin later this year; as well as heightened expectations for the Lightning Network; and generally speaking, the realization Bitcoin doesn’t NEED the scalability and privacy upgrades MimbleWimble offers; I no longer have the same expectations of MimbleWimble’s impact as before.
To that end, I still believe the class of the MimbleWimble space, Beam, has a great reward/risk profile at a $14 million market cap - for those seeking to hold a modest portion of their assets in altcoins. However, given MY personal financial goals, I no longer wish to hold any altcoins at all. As for MWC, it’s ugly transformation into a centrally managed, manipulated, low hash rate sh-tcoin, is as far from what I expect to be successful as you’ll get – which is why, at its current $34 million market cap (thanks to “airdrop luigi”), I view it as one of the most egregiously overvalued coins in all of crypto.
Sure, the Coronavirus scare COULD theoretically reverse, if a dramatic reduction in infections and/or the creation of a vaccine occurs. However, this is far from consensus thinking right now, which is why you MUST pay heed to what markets are telling you.
Individuals, corporations, and governments will be bankrupted like nothing we’ve seen since the Great Depression if this lasts much longer – and thus, I expect risk aversion to explode like nothing any of us have witnessed. This is why I expect Bitcoin dominance to surge dramatically, unlike anytime in crypto history – and why you must consider NOW how you want to be positioned. LIQUIDITY will trade at a premium, and Bitcoins’ liquidity (and use case) is stronger than all other coins combined.