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OPINIONS
Q1 Reflections, Tail Event Winners and Alpha Leaks.
Lin Yun Heng
Edited 25 Mar 2022
Senior Analyst at Delphi
This post probably concludes Q1 2022. With the FOMC meeting concluding a 25 Bps rate hike, it relieved the market from uncertainty (at least in the short run) although the war in Ukraine remains while potential threat of escalation between Russia and NATO still remains.
With the sigh of relieve from the expected rate hike this time round, markets had to rally – starting from the further end of the risk curve first: Crypto.
My personal portfolio basically bottomed out on 22 March before it went on to stage a comeback rally and now I’m back at January highs all over again. Did my portfolio change a lot? Oh yes.
As of 25 March 2022
Portfolio is looking messy and I agree. How did it end up looking like that? Well, I basically took profit off Fantom (sold 70% through slow and steady DCA) and rotating into stablecoins and allocating more into Cosmos Ecosystem tokens.
Why did I sell my Fantom? Opportunity Cost.
I already made more than 10x from the ecosystem and it made sense that I milked whatever I could out of it and had to compound those profit elsewhere. I am not bearish on Fantom in any way but simply moving on because there are better opportunities elsewhere.
Also regarding Stables, majority is farming on Stargate.
The Cosmos Ecosystem coins like ATOM, SCRT, JUNO, OSMO are either staked with validators for airdrops and yield or pooled on Osmosis and JunoSwap. I am not planning to be actively looking at this portion of my portfolio and just going to be as passive as possible while my active efforts lie elsewhere. Cosmos ecosystem somehow died off after the failed launch of EVMOS (EVM + Cosmos) and the recent squeals on Juno and their proposals, but I couldn’t care less.
App-Specific Chains, IBC, Inter-Chain Security, CosmWasm, Evmos** **– All of which are excellent innovations within the space that you cannot find an equivalent competitor anywhere else. (Subnets are not even close)
The Tendermint team has been building non-stop and it simply is a matter of time before the Cosmos Ecosystem become a thriving network of app-chains that serve their main utilities and become the best in class for that use case.
As we head into Q2, GameFi tokens are starting to heat up once again. This time, the best performer thus far has to be Crypto Unicorns for me as I sold my floor unicorn NFTs for 23x gains while the governance token RBWmanaged to 5x in a month. Not forgetting that the team has been dropping the community and early adopters with ample rewards such as RBW tokens and UNIM tokens for long term holders of the game NFT.
Embersword is also coming in with its beta testing gameplay for Badge holders and Land Owners and I am definitely excited to play this one. Its Free-To-Play first while the Earn aspect is applicable for Land Owners that wish to earn yield from their digital estate.
Crypto Raider is a Runescape-looking, dungeon raiding RPG that has one of the best crypto gaming communities in Web3. You can either purchase Raiders that will enter dungeons and defeat monsters to earn rewards and loots, level up and defeat bigger bosses etc. You can even become the dungeon monsters itself by purchasing MOBS, which are essentially passive yielding NFTs as long as they defeat other Raiders that come along and take a portion of their loot and rewards. I am currently just staking RAIDERtokens in the Raider Bank for passive AURUM rewards. (unlocks in 10 days)
There are more games that are coming down the pipeline but these are the 3I am currently vested heavily in (tokens and/or NFTs).
As a GameFi side bet, I also allocated a small amount towards Immuatable Xto bet on the entire GameFi stack within the Immutable ecosystem. IMX is definitely not a long-term hold for me (valuations are too high imo) but I am willing to trade it once the macro GameFi tailwind hits. (Might be right now)
As the Merge narrative edge closer and closer, I am enjoying my time on one of the best Layer-2s of Ethereum: Metis.
User experience is just superior with super fast transaction times and cheap fees (it will get cheaper!) while enjoying the security and decentralisation of Ethereum. There is also something about Metis-based Dapps that is so enjoyable as they’re all related to the Greek Gods and they have some of the best dashboards in crypto and no one is even talking about it.
Being able to deploy multiple virtual machines (Versatility), Polis Middleware (Allows Web2 to port over to Web3 easily), native IPFS integration, Ranger upgrades (solve the drawbacks of Optimistic Rollups) and many more are reasons why I think Metis will win the Layer-2 scaling wars.
It is a matter of time before the Ethereum community and the greater crypto communities realise the power of Metis and some of its advantages it has against fellow Optimistic Rollup Arbitrum and Optimism (which still does not have a token).
If you are bullish on Web3, you are automatically bullish on Pocket Network, period.
Infura and Alchemy are centralised solutions with sunk cost from monthly fees to use their services. POKT solves it. With more POKT nodes servicing more relays for the entire web3 – Ethereum, Avalanche, Harmony, Polygon, Fuse, Binance Smart Chain, Fantom etc, it will only help to decentralise crypto infrastructure layer even more and create a truly anti-fragile and censorship resistant web3 ecosystem.
I am currently staking all my POKT on Poktpool and receiving passive yielding rewards in POKT.
Do I need to say more? I am only regretting having such a small allocation towards LUNA. What about the Anchor FUD? I think it is an issue, but Do Kwon won’t let Anchor fail. Never. UST will continue to see the adoption flywheel, outpacing other Stablecoins designs while continuing to innovate new ways for more use cases and diversify away from Anchor.
I won’t be adding more to my LUNA allocation.
I realised I haven’t really talked about the NFT side of my portfolio, but essentially I am currently holding these (significant NFTs with value only)
I’m going to keep this post short. Work has been busy and never-ending (crypto never sleeps) but thoroughly enjoyable and fun. I also won’t reveal the exact figures in $ amount of my portfolio anymore for the sake of privacy and security, but the market has been forgiving to me thus far and a few tail events like RBW token and the overall Unicorn ecosystem has been keeping my portfolio afloat all these time.
2022’s crypto market is definitely much tougher to navigate compared to 2021. More sophisticated players are getting into the space day by day and the market will eventually get more efficient. Alpha is shrinking and becoming increasingly difficult to find and it will become more and more difficult to make life-changing returns like it used to be in the past.
As the market continues to climb (for now or longer it doesn’t matter), remember to take profits along the way as the market will eventually crash (and also recover again). But taking profits is the most secure way to compound your returns in my opinion and let tail winners have its run and not disrupt it unnecessarily.
Hopefully Q2 will be a bullish quarter as we head into the Merge narrative and Ethereum finally transforming into a Proof-Of-Stake, ultrasound money powerhouse. Nation states are still buying into Bitcoin, while regulators have displayed accommodative stance towards crypto while TradFi firms continue to explore the blockchain space. We are at the steepest part of the adoption S curve, and yes, we are still early, although it will get increasingly harder to make mouth-watering gains as the market becomes efficient.
If you think crypto is interesting but you find it hard to learn about them, you can consider joining my telegram group where I share articles, investment opportunities and more research based content on an almost daily basis. You can also ask questions, and take part in polls to see how others think as well!
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I did a bite-sized article on Ethereum for you to get a crash-course on what the buzz word is all about here.
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Disclaimer:
The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.
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ABOUT ME
Lin Yun Heng
Edited 25 Mar 2022
Senior Analyst at Delphi
Crypto Educator
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