I Didn’t Get Lucky (October 2020 Monthly Update)

It’s a monthly update post again, so let’s kick it off as usual:

BTC Performance, October 2020

S&P 500 Performance, October 2020

Interesting!

In the first part of the month, we were observing a behavior which became “normal” and “expected”: a strong correlation between the stock and the crypto markets. This is something that became especially obvious during the Covid crash in March, when both dropped by significant amounts.

However, as the end of the month approached, S&P and BTC started moving in the opposite directions, as can be observed in the charts above.

I wanted to pre-write parts of this monthly update post and started preparing paragraphs about how everything is correlated (including bonds), why is that “dangerous”, and how there are no hedges against a downturn economy… And by the end of the month, most of that text became obsolete. Of course, this may be an outlier because we’re in critical points of an election cycle, but what we’re currently observing, at least in the short run, is crypto being a hedge against a stock market crash.

Now, the stock market’s performance this month was initially pretty good, and personally, I was quite happy with the “buying opportunity” it presented. Especially because it almost perfectly coincided with the time of the month I’m doing my monthly contributions. I like it when they’re aligned, although I’m not the type of person who swing trades or exits positions ever. Short-term gains stopped have a soothing effect on my otherwise hyperactive mind.

If you’re new to my blog, I put quotes around “buying opportunity” because although it was in hindsight, I’m not promoting waiting for a market decline in order to invest, nor I think that anyone can do it successfully continuously or even multiple times in a row. And even I, although clearly stating my expectations of a post-election crash in this post from a year and a half ago, was happy to put more money in the market, as I do every month.

A sentence that perfectly summarizes what I’m trying to say but without the noise of the unnecessary details is:

“You can’t time the market.”

Especially not as an amateur unsure if he’s individually trading or investing. And the efficiency of these markets might lead us to a conclusion that not that many professionals can do it either. Certainly not repeatedly.

But hey, a major gain once might prove itself more valuable than the 5% real yearly returns realized by a relatively risk-averse investor… So let’s switch our attention to one of the biggest asymmetric opportunities of our era.

The Opportunity in Crypto

I keep seeing people in the personal finance/FIRE community that are vocal about the alleged risks of crypto investments while at the same time picking stocks… Which is totally fine when it has basis, but it’s usually done by people who think that BTC is a scam and that dividends somehow make them wealthier.

Anyway, I’ll dedicate a post about demystifying some of this in the future, but for now, I’ll point out the two of the many valuable characteristics of being a cryptocurrency investor:

• Decentralization – no central point of failure or authority validating transactions, restricting users or use cases, or disrupting liquidity
• Ownership – as long as a hodler owns his keys, there is absolutely no way for anyone to steal or have any type of say in how he’s using his money

Before I was into finance, I heard about these benefits of crypto but just shrugged them off. I didn’t know which risks I’m assuming by having my wealth:

• In a bank account owned by a private institution – one that doesn’t even have the cash reserves to fulfill withdrawals (not a conspiracy, a fact).
• In a currency created by a government – a valueless number I can’t convert into anything outside the borders of a country or economic union, unless paying fees to other private institutions to convert it to another made up store of value.
• In an economy controlled by a central bank – one that freely adjusts the interest rates and the money supply, thus determining the value of everything I “own”.

Crypto solves all of this. And without having the downsides and impractical aspects of any other asset with global value and limited supply.

Anyway, why am I saying all of this in a monthly update post?

Well, the future will happen. And the people who claim that Bitcoin is a scam are the same people who’ll look back and claim that crypto investors somehow got lucky.

This will be a result of a thought process such as this one: some people took stupid amounts of risk… way out of their risk tolerance… invested in speculative assets with no real value… and these assets somehow grew in value… probably because someone was dumber to buy them at a higher price…

So, if you’re reading this after 2020 and you missed the opportunity, this is for you.

Read the following sentence, unambiguously and in its simplest form:

I Didn’t Get Lucky.

On the contrary, I have valid reasons to be in the crypto market – not only as a trader, but also as an investor. The ones mentioned above are just scratching the surface of everything that can be learned. And the more knowledge I gained, the more I increased my asset allocation in the asset class. It’s currently around 30% of my total portfolio – and a big part of it is unrealized gain already.

Okay, but what does this mean for you, the person who thinks that hodling BTC is riskier than holding cash?

Well, I’m not trying to convey “buy BTC now!!!“. However, I’d highly recommend to open your mind and start accumulating knowledge (and not necessarily limited to the topic I’m talking about here). I’m not sure when will you read this post, but I’m sure that there are opportunities out there that the general population discards or is still not aware about. And here is where you should come in – firmly setting your role in the next big thing by the simple means of being curious about the world you live in.

I clearly documented my thought process and expectations about BTC in the Bitcoin Price Forecast I wrote in early 2020. And since crypto is a space where scams are common and easy to fall for for emotional newbies, I also have a post about securely storing your crypto (the amount of BTC kept on exchanges is slowly going down, which means that many people are doing the right thing – at the same time, it lowers the supply available for new buyers 📈).

But of course, if you simply don’t want to learn about the technology or the actual financial problems that are solved by blockchain, at least learn about the law of supply and demand.

That’s the bare minimum and most probably affects you more than you may think.

Monthly Update

Crypto.com VISA Debit Card

Back to the monthly update.

I opened an account on Crypto.com this month. The reason is not for buying, holding, or trading cryptocurrency – I’m a big proponent of cold storage and keeping our coins out of exchanges by all means!

The reason I opened the account is because of the Crypto.com VISA Debit Card they’re offering. I found it as a great deal and decided to get it immediately. The card offers various benefits, including:

• Up to 8% cashback
• Free Spotify subscription
• Free Netflix subscription
• Free Prime subscription
• Airport lounge access at more than 400 airports worldwide

Here’s a picture comparing the different options:

As you see, the benefits differ based on how much CRO you decide to stake for a 6 month period. The USD equivalents are around 100$ for the red card (2% cashback) and 1000$ for the blue/indigo cards (3% cashback). I assume most people would go for these two. You also get interest on the staked amount.

And the best part? When staking even for the lowest tier card, you instantly get 50$ worth of CRO in your account.

No waiting, no ambiguity, no hidden steps. It’s literally there and you can immediately sell it for BTC or ultimately convert it to your local currency via an exchange of your choice.

I used a random youtuber’s referral link and got 50$, my girlfriend used mine and we both got 50$ more. It was an instant 150$, ready to be spent within moments.

Update: The referral bonus was lowered to 25$. 

The way it works is as such – and the application itself will lead you much better than plain text:

• Download the Crypto.com app on your phone
• Optional: use this link or this referral code – pnhtk5afgv – and we’ll both get 50$ 25$ once you stake at least 1000CRO/~100$ (you can also add the code after you opened your account and still get the reward)
• Buy and stake the amount of CRO you want
• Fill in your details and verification and wait for your card to arrive

That’s it!

The risk you’re assuming is the price of your staked CROs tanking. I happily took it. In Europe, cards that give any types of rewards are so rare (unless we’re happy to pay hundreds of euros in fees just to collect miles), so finally finding an opportunity with a cashback was a good deal for me, even if CRO goes to 0. Worth it.

Please note: this is not a direct recommendation nor I’m affiliated with Crypto.com. The rewards and referral bonuses are verified and real, but I don’t make any claims on the platform’s long-term well-being. I don’t keep money I can’t afford to lose on any platform.

However, I found it as a great opportunity, opened an account, and sharing it as part of a monthly update. 👍

Until the next post, keep your wealth safe. 💪

And semi-related to the topic of risky investments… If you ever thought about renting Grupeer’s former office space, here’s a link: nice office for rent in Riga.