In terms of next steps for $BTC, I'd like to see:
- A clear breakthrough above $61,000, as that would flash and confirm that the bullish divergence becomes valid.
- A clear breakthrough above $64,000 would indicate that we're going to see more momentum towards the top of the range.
Until these happen, there's not much to be joyful about, apart from the fact that there's a massive discount on #Bitcoin.
The more $STRC becomes 'safe' in terms of lower fear, the more strength we'll see coming in from Bitcoin.
Rebalancing your portfolio, the essentials
The way of making it through the bull cycle of crypto is through rebalancing your portfolio.
Through rebalancing your portfolio, you'll be able to compound your returns, while limiting yourself on downside risk.
Let's discuss this.
I often talk about this concept of rebalancing your portfolio and it's the primary lesson I've learned from the previous cycle on what you should be doing.
The reason for this is that, if you don't have a strict plan in mind, then it's very likely that you'll burn yourself on selling too early, or you'll burn yourself on selling too late as it's hard to predict how high/low the markets can go.
Well, there's an actual guideline in order to making sure that you will avoid both.
It's through rebalancing.
Let's have an example on this regard, let's say you've got the following balance on your portfolio:
- Total investment in crypto is $100,000.
- From this portfolio, you'll have $50,000 in #Bitcoin.
- The other $50,000 will be allocated towards #Altcoins.
- You don't have any other investments.
Let's assume that you've allocated yourself entirely towards the altcoin markets and that the altcoins are heavily outperforming Bitcoin. They go 5x, while Bitcoin remains flat.
Your portfolio balance will be:
- $250,000 in #Altcoins.
- $50,000 in #Bitcoin.
- Your total portfolio has become $300,000.
Of course, this is a great way of making a return, and as a benchmark, you should be having a goal to outperform Bitcoin by trading altcoins, otherwise it generally doesn't make any sense.
However, once you've been making profits, it's not really about making more profits, but rather about preventing you from losing those gains (this happened to me after the previous cycle).
What you should do is to keep your risk appetite in mind. If you general benchmark is to have atleast 40% of your portfolio into Bitcoin, then you should make a monthly habit of rebalancing your portfolio.
Through our example, this would mean:
- $70,000 to sell from your #Altcoins towards Bitcoin, through which the allocation becomes:
- $120,000 in Bitcoin
- $180,000 in Altcoins
In that way:
- You are locking in profits to a safe asset.
- You have flexibility to be allocating towards altcoins again once the markets are turning the other way around.
Within your altcoin portfolio, you can basically do the same. If one of the altcoins is outperforming, you might be able to rotate those profits towards altcoins which haven't been moving at all.
When to start taking profits?
This is important, as you'll need to make sure that you start taking profits at the right moment.
For me personally, this would be at the moment that we're getting towards the March high of the altcoins. That's my first reference point of starting to scale out and to be having my rebalancing appetite in mind.
What do I do if things go higher?
I generally don't mind things going higher, as I'll still have my allocation, but just less.
If altcoins go higher, then this would mean that risks increases and, ultimately, my goal is to outperform Bitcoin, nothing more. If I've been doing that, congratulations to myself, on to the next step.
What is my base pair?
This is also a great question that's being asked lately.
Currently, my base asset is ETH. I think that Ethereum will be outperforming Bitcoin substantially in the coming year, through which I'd prefer to stay in Ethereum.
However, this is subjective to change. I could go more towards Bitcoin once Ethereum starts to be skewed to the upside, or even, I could move some more towards USDT as I think that the markets are going to correct in the short-term or finish the cycle.
Again, selling Bitcoin towards USDT would mean that I'm aiming on making more Bitcoin through that move.
Hit like if you enjoy these educational updates and if you'd like to see more of them coming.
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