Cash / SRS / Crypto Portfolio
Performance Indicators / Dividends (TradFi Portfolio only)
- YTD Time weighted return: 1.40%
- XIRR since portfolio inception in 2013: 16.36%
- Dividends collected YTD: SGD 3,132.61
Note: I don’t provide details or returns metrics on my crypto portfolio publicly.
What a month!
May was a significant reminder to crypto bulls that things dont go up in a straight line. A bunch of negative crypto news in a short period of time managed to shake out a bunch of weak hands and leveraged long positions. The resultant cascading liquidations and somewhat irrational fear led to a correction of over 50% in BTC and ETH, while most smaller cap coins suffering up to 80% drawdowns from peak to trough. Thankfully, the market retraced part of the losses before settling into a trading range.
Consequently, my overall portfolio value fell to $2,878,250. Which brings me back to where I was in… mid April. Lol.
I learnt a lot about myself and crypto market infrastructure in the past month.
My reflections will be quite technical if you’re not a DeFi native, but hope you guys understand it after some research
This was probably my second large percentage drawdown in my crypto portfolio, the first being the end of DeFi Summer in September / October last year. I faced a similar drawdown of 50-60% then. The difference this time being 7 digit paper losses vs 6 digit losses then.
Honestly, I think I did a decent job at controlling my fear. It wasn’t perfect (I sold some holdings into the sell off), but I pretty much had diamond hands over my core holdings. And thankfully so too, as most of my holdings rebounded well from the lows.
Taking profits (to stablecoins)
Which brings me to the topic of taking profits. In traditional markets, I rarely sell unless there is a macro or structural risk to the financial system. Covid-19 is the most recent example of such a risk event.
I brought this philosophy to crypto as well, thinking that I would simply hold through boom and bust. This selloff made me rethink that perspective.
The crypto markets are so volatile that non-structural threatening news will take down crypto markets by large percentages. This presents plenty of buying opportunities for the macro long investor like me.
Also, stablecoins offer fantastic yield compared to traditional markets. As such, the FOMO of markets skyrocketing without me due to profit taking is cushioned by these stablecoin yields. These stablecoin yields also have the added advantage of being able to pay for my living expenses, something that my other crypto holdings doesn’t inherently do.
Going forward, I’ll take more profits as the market goes up to secure my baseline portfolio value. That said, its probably not a productive exercise if you have small portfolio size.
Having on-chain leverage
For the uninitiated, Ethereum and other smart contract platforms charge a fee to process your transaction. This is in part to incentivise miners to confirm your transaction.
How this fee is determined in usually in a auction, with miners picking transactions offering the highest fees to be confirmed first. It is in a way like a “rush pricing” model used by Uber or Grab, where supply and demand dynamics determine transaction price.
So you can imagine what happened in the depths of the fear that gripped crypto markets following the China crackdown announcement on bitcoin mining. Transaction fees on the Ethereum skyrocketed to levels I’ve never seen before as people / whales were paying exorbitant fees to get out of their leveraged / unleveraged positions.
We’re talking about 2,000 gwei here. I did a test transaction that needed me to pay 1 ETH (~2800 USD based on today’s price) just to confirm a single transaction LOL
I was looking at this and trying to imagine a much smaller fish trying to unwind their leveraged position. They would have been liquidated as they simply couldn’t afford to unwind that position.
So the bottom line for on-chain leverage is:
- Avoid using excessive on-chain leverage. My thought is to maintain Loan-to-value of about 33-50% maximum based on historical crypto drawdowns.
- Try to have this leverage only on scalable solutions where network congestion is less of a problem. Polygon worked smoothly throughout the meltdown for me.
ETH DeFi just works
One thing I was very impressed by was how resilient ETH DeFi was to all the mayhem. Blue chip DeFi apps worked as intended, with no protocol collapses that I know of. Liquidations were smooth and systems worked as intended. Other than the high fee situation, nothing broke as far as I could tell.
ETH DeFi passed its first major stress test with flying colours, so excited with what scaling can do for these DeFi apps when launched over the next few months.
Appearance on Endowus
As some of you may know, I appeared on a recent Endowus Webinar talking about my personal thought process and whether someone should allocate to crypto now or not. My short answer was yes, but make sure you’ve done the homework and size your position according to the amount of homework you’ve done.
Hope this helps open everyone’s eyes to crypto’s current and future applications. Do more in-depth research rather than rely on uninformed mainstream media to educate you about crypto. Some key words to check out is DeFi and Web3.0.
As usual, this is not a call to buy or sell securities and its just sharing my own thought process for your information. Also, crypto is dangerous AF. Please do your own due diligence prior to investing.
Endowus CPF OA Portfolio
As you may know, I’ve started investing my CPF OA funds with Endowus. I’ve been sharing my portfolio performance for readers’ reference to evaluate product performance for themselves. Nothing much special this month, just the recurring monthly top up.
If you want to learn more about Endowus, do check out my review (Cash/SRS/Fund Smart portfolio details to be updated). Also, if you’re interested in opening an account, do feel free to sign up through my referral link. We will both receive $20 off access fees per referral.
As usual, to the 8 and 18 people who liked my Facebook page and subscribed to my blog respectively since my last portfolio update, welcome. Most of you guys subscribed / liked after my webinar with Endowus, which is awesome. Feel free to reach out via email or Facebook. I’m usually quite responsive as readers can attest to. Hope that you have found my blog content useful 🙂
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