Joey's Investment Journey - Crypto (Oct 2021)

Crypto Porfolio Performance*

Multiple is expressed as: Total crypto assets / Total cost into crypto. The last time I added real-life money into crypto was in July 2020. My starting point for comparison (being conservative) hence will be start of 2020. Portfolio breakdown will be fleshed out in the *crypto section. I’ve included an index to track (assuming if I invested all my cost into BTC and hodl) my active investing performance in crypto.

Crypto Portfolio commentary

Over the past month, I was trying to aggressively position for the upcoming Q4 2021 / Q1 2022 play, where I anticpate to be Bitcoin heading to $100k and L1 chains being way higher than they already are now. Nobody knows what will happen though.

Bitcoin’s futures-backed ETF ($BITO and $BTF) was also a decent success with _huge _volume. Finally, a way for other investors previously restricted by regulations to be exposed to bitcoin. Take a look at this chart from coinshares’ weekly report (ending 22nd October). I expect the trend to persist for the week ending 29th October).

Of course, the bulk of this was due to the ETFs being listed. But, this tells you just how much money is eagerly awaiting such a product. I will leave you to draw your own conclusions.

My portfolio has been simplified as below. The only adds for October was in BTC and Luna. Note that this represents the market value of my portfolio, and not the costs that was invested in each position.

Past readers will remember I had many more Solana L2 tokens (under the category (Others-SOL). I basically re-evaluated my bullish positions on such governance tokens (e.g. RAY, COPE, and other smaller ones). I felt that value will accrue to L1s first, and that governance tokens in and of itself, represent no utility.

Furthermore, the tokenomics of such tokens are that they have very, very high inflation rates. High APYs represent good yield for the degen farmers. Sophisticated farmers would short the asset on say FTX to remain delta neutral; rewards are immediately sold. I also wanted to consolidate my L2 tokens in the Solana ecosystem. Solana remains a key ecosystem which I’m heavily involved in, and am most bullish on (see my meta-thread of resources and useful info here).

What are L2s? Learn about them here.

I also favored the potential of Terra (Luna) as an up-and-coming L1 that should be on par with Solana, especially with its algorithmic stalecoin that is quite frankly, well designed. Furthermore, there was talk of many protocols waiting for the Columbus-5 upgrade before launching on the Terra network. They have also listed multiple proposals to burn the supply of tokens, which are generally good for price. Ecosystem is strong and so is the demand-supply imbalance. I’m long. :)

Like Solana above, I've compiled a meta-thread on the Luna/Terra ecosystem too.

The top 4 of my crypto positions by costs (not in order) are:

BTC, SOL, LUNA, FTT

FTT represents a pseudo-ownership in the exchange, FTX. This token, unlike other governance tokens, has actual utility. Oh, and it also burns a portion of their revenue. Talk about stock buybacks. Essentially, if FTX becomes a top-tier exchange for retail investors similar to Coinbase, you can expect a positive return on owning FTT simply by its buy-and-burn mechanism. Read their explainer here.

Note: you can thus see that my current Solana position is not by choice, as it appreciated by so much during the year.

Essentially, I am rebalancing my portfolio for what is coming. It has become a seriously large amount of capital, and with great capital come great responsibility steward it to potential financial freedom, whenever that may be.

Yield Farm developments

The trade-off between yield farm and holding spot token is one that investors must definitely consider, especially in this bull market. Here’s a thread explaining why yield farming may not = passive income. After my forays into liquidity farming, I am coming to terms with the risk. I urge yield farmers to take a look at the thread here.

The returns will be highest (due to emissions and fees) if the price or underlying price ratios stay constant (aka ORCA/USDC stays at ~$X forever). With alts (& their volatility), impermanent loss (IL) will come back and bite you to say the least. And no, triple-digit APYs will not shield you from IL if price of the underlying token is super volatile.

Solana

My spot tokens are still farming yield at 10% on Sunny (which aggregates yield on Saber). The emissions will likely trend down, as will the price of Sunny governance token. As I've said above, governance tokens without utility are essentially worthless. I’ve seen the price of $SUNNY spike to 0.2 all the way back to 0.03.

Since there’s no impermanent loss on the pairs (cross-chain liquidity, hence a lot of wormhole - native token pairs), I am comfortable with putting my spot tokens (SOL, FTT, SRM) there for yield.

When there’s a yield, there’s a way.

I’ll also make it a point to convert the rewards to USDC as sort of a passive income. A lot has changed with my other farming activities as I looked hard on my Solana L2 tokens. As such, I’ve removed my Raydium from their staking platfrom, and sold them.

I’ve also removed my liquidity from the Orca pools. Even with triple-digit APYs, the volatility of these coins will eventually contribute the pool’s impermanent loss as the coins can drop (or rip) 20% or more in a day. Furthermore, I’ve not done deeper research on the coins I am farming; conviction is low. If there was to be a bull market, my holdings should ideally be in the spot tokens I feel most confident about (which I’ve stated above).

I am still maintaining my leveraged farming position on Solfarm (rebranded to tulip garden). Having started with a high $ORCA price of $17.73, the sudden crash to $8.68 felt like I was kicked in the stomach repeatedly. However, as long as the kill buffer does not reach 0, my position won’t get liquidated. Thankfully, with well-timed additions into my position, I managed to bring my cost down to $13.3.

I will keep this farm running for as long as I can (as an experiment), but that is very much dependent on the downside volatility of $ORCA.

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Position value: $2050 Position cost: $1000 + 200 + 200 + 350 + 350 = $2050

After a long month, I’ve finally broke even… 😅. Let’s hope November will be better.

LUNA

I’ve put my LUNA in as collateral to loan some UST to put in a simple Anchor savings account yielding 20% annual rate. There’s also some way to juice it up to 160+ APY?! Check out my meta-thread on Luna above. All risks are your own, please do your own research.

Binance Smart Chain

The USD position in tranchess was liquidated so that I can add to my existing crypto positions. The reward tokens are still locked there (~180 CHESS) until March 2022, so will just bag hold till then.

Avalanche

Similar to Raydium on Solana, staking $XAVA provides early allocation in IDOs happening on the Avalanche ecosystem. It also provides a nominal 2% APY as rewards. The past IDOs that took place on the platform can be found here.

Compass Mining

I was eagerly anticipating my miner going online by Oct-31. This date was repeately touted (confidently, if I may add) by the team to be when all miners affected by the South Carolina delay (my 1x miner originally for Sept-31 at facility A @ SC was delayed as A was not ready to host miners yet). There were already strong doubts by the community that the team can meet the timeline and indeed they were right.

Essentially, it meant a maximum of 3 weeks delay on 2x miners (I bought 1 to go online in Oct-31). Meaning these miners will go online on 7th to 21st November. There was naturally, a ton of backlash as promises were broken. For me personally, I think the opportunity cost is not as big (as only 2 miners) but always better to stack sats earlier than later. My dream of a bitcoin mining empire will just be delayed further. 😊

Will provide updates on Twitter when it does go online, and a subsequent bi-weekly update after that!

Not financial advice.

This write-up is an adaption from my substack article here.

Conclusion

Thank you for reading thus far. Crypto operates on a super-fast timescale. 1 month in the crypto markets seems like 1 year in the stock market. It can be quite tiring to keep up of both crypto AND stocks. The sprint to Q1 2022 begins…

Till then, I appreciate every single one of you who read this and felt like they were joining me on this once-in-a-lifetime journey. If any of the info and readings helped you in your own investment journey, I will have not written this in vain. 😊

Cheers, Joey