2021 Crypto Portfolio Review

One crypto post, one-non crypto post. We all need some balance in life, eh?

Crypto is without a doubt, an ultralearning project for me in 2021.

I was pretty groggy and lost for the first quarter of the year, just dca-ing into BTC and ETH. During the second quarter, I realised I was the exit liquidity for Defi 1.0, bagholding many of them until today. From the third quarter onwards till Dec, it was pretty glorious as moving out on the risk curve proved extremely rewarding, both intellectually (two great reads from crypto OG Cobie here and here) and financially.

Unless something drastic happens on the last two days of the year, I will be up >100% on deployed capital. The XIRR is probably >200%.

Pretty incredible by Tradfi standards but probably meh compared to other year-end performance reviews from other crypto bloggers.

I am not complaining though, since I tend to be quite conservative in the crypto space and adopt a largely “spray and hope” strategy.

Exploration vs Conviction

“Try everything in crypto, you will be well-rewarded as an early user” – Crypto Twitter

“Conviction > Diversification. A portfolio with 5-10 coins will outperform one with 100 coins” – Crypto Twitter

“Over the long run, 99% of Crypto coins will trend towards zero. Attention will move towards the new meta” – Crypto Twitter

There is alot of truth in the three statements individually but the true wisdom probably comes from resolving the tension among them. And different strokes for different folks.

Personally, I prefer overdiversifcation to underdiversification to help me sleep better at night. I am also not that good a rotator, so I tend to have rigid rules to help me take profits. For example, unless I have super high conviction, I tend to take 1/3 off when a coin goes 3x. And so on.

For the exploration part, I like to put ~1% of my capital to work on a new protocol with good upside. If it 5x or 10x and then become like 5% of my portfolio, it becomes a sizeable position in the porfolio. If it dumps to 0, the adverse impact will be minimal.

Besides the Big Two and Stablecoins (USDT, USDC, DAI, UST, MIM), I have opened positions in BNB, SOL, LUNA, AVAX, DOGE, CRO, MATIC, LINK, AXS, FTM, SAND, FTT, GRT, GALA, AAVE, CAKE, ONE, AR, OHM, RUNE, CVX, CRV, SPELL, SUSHI, SNX, JEWEL, TIME, ANC, YGG, JOE, MIR, MINE, ALCX, BAL, GHOST, IN, BOO, SPIRIT, GEIST, TOMB, LQDR, YAK, DINO.

That’s easily >40 positions and I still have open positions for the majority of them.  However, as of now, only a few positions will move the needle. The top 8 positions (including stablecoins) take up >90% of the portfolio value. That’s where I am spending most of my time/effort on to make sure they do not go to zero.

The rest are just dust.

Portfolio Breakdown/Analysis

Bitcoin (10%)

• My average cost for BTC is ~$40,000
• All of the purchases are through small DCA amounts over the year
• Split into three pots: Hodlnaut, WBTC in atricrypo pools and cold storage

Ethereum/Ecosystem (15%/10%)

• My average cost for ETH is ~$2,500
• Besides DCA amounts, I have made significant lump sum purchases during dips in May, Sep and Dec and of course some bad forays when I wanted to provide LP on Ethereum/Polygon network
• Most of my ETH are in Defi and paired with other tokens in Liquidity Pools
• Clear winners in the ecosystem include $CVX, $AXS, $OHM, $SPELL
• Losers in the ecosystem (especially priced in $ETH) are $LINK, $ALCX, $SUSHI, $AAVE, $RUNE, $YGG
• Although losers outnumber winners, I am still better off taking these risks in altcoins vs just staying in $ETH. Just a couple of 5x would have outweighed all the ~50% losses and some of the high yields helped to mitigate the pain in some pairs.

Luna/Ecosystem (20%/5%)

• My average cost for $LUNA is ~$15
• I bought them over 4 tranches, $15 during March, $6 during May, $8 in July and $35 in October (converted holdings in Binance to LUNA before closing account)
• My $LUNA returns are also amplified by the forays into Galactic Punks and minting other NFTs. On average, I made >10x for each NFT that I minted. I am super bearish on NFTs in its current form. If 99% of tokens will go to zero, 99.99% of NFTs will be valueless.
• I have moderate conviction in $LUNA, so I only sold small amounts (5-10%) at $25, $50 and $100.
• Not a big fan of the ecosystem coins. I sold most of the airdrops and farming yield and converted them into $UST. The only Alt coins in this ecosystem that I hold currently are $ANC, $MINE and $ASTRO.

AVAX/Ecosystem (5%/5%)

• My average cost for $AVAX is ~$30
• Bought two tranches in August alone when Avalanche Rush was announced and unlike $BTC, $ETH and $LUNA, $AVAX could be farmed, which helped to reduce the cost of acquiring the token
• With the Ethereum ecosystem proving to be too expensive for me to both enter and exit with ease, I actually used the AVAX ecosystem extensively from August, enjoying stalwart protocols like AAVE and Curve.
• $JOE was my first significant breakthrough in Defi as I achieved a 10x within a couple of weeks. Immediately after buying $AVAX and crossing the bridge, I started to think about 2nd and 3rd order effects and was rewarded handsomely.
• Lost quite a bit of $$$ on $YAK and $GB tokens though. The opportunity cost (imagine rotating into TIME in early Sep) is especially painful.

FTM/ Ecosystem (5%/5%)

• My average cost for $FTM is ~$1
• Interestingly, $FTM is my biggest position in terms of capital for Alt L1s.
• Pretty late to FTM as I only started exploring the ecosystem in September. Like $AVAX, $FTM is currently farmable.
• The ecosystem, speed and vibe is pretty similar to AVAX, just that there are more native protocols and less VC shilling over at FTM. This is my favourite farming ecosystem currently due to low gas fees and degen yields.
• Pretty meh returns so far for $GEIST, $SPIRIT and $BOO.
• $TOMB and $LQDR has helped to save the day though.

CEX Coins (5%)

• Small positions in $SOL, $FTT, $BNB and $CRO
• Quite bullish on these CEX coins as I feel this is where most retail will stop at
• Doubtful that DEX volumes will eventually exceed CEX
• Staking these tokens either enable you to get free withdrawals or provide material benefits like free Spotify or Netflix

Stablecoins (25%)

• Diversified almost equally in $USDT, $USDC, $UST and $MIM
• For the first half of the year, I owned almost zero stablecoins when I was building up my crypto portfolio from scratch
• So these stablecoins are largely accrued from taking profits in $OHM, $SPELL, $LUNA, $AVAX, $JOE, $TIME and $FTM
• A baseline rate that I look for is ~15%, since this is the rate that I can get in a CEX lending platform like Hodlnaut.
• Curve, leveraged platforms like Alpha Homora/Tarot and Anchor are great places to consider for parking crypto profits.

Bracing For 2022

After such a great year for crypto in 2021, I think it is easy to be lulled into a false sense of short-term bearishness.  I truly do not know but I expect something unexpected. I really doubt many at the end of 2020 could have anticipated what happened in 2021.

Those who did really huat big. Maybe 100x.

For 2022, I doubt I will be injecting much capital. If I can achieve >100% again for next year, a comfortable semi-retirement could truly beckon.

Thanks for reading and wishing you and your family a Happy New Year!

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