GM PRO DOers!
Are you ready for the next big crypto bull run?
Because it’s time. The moon mission is underway!
Have you packed your bags and feel confident in your portfolio for this cycle? Or are you flying by the seat of your pants?
This PRO report is designed to help you pack your bags for one of the greatest wealth creation opportunities of our lifetime.
As I shared in my 5 Tips For The Crypto Bull Run PRO article, this industry went up 33x in terms of market cap during the last cycle.
In this cycle, the low for the industry was put in in January 2023 at around $800 billion.
We’re currently sitting at $1.6 trillion and I see no reason why we don’t top out at over $10 trillion within the coming years.
That’s at least a 7x from here in under 2 years. Now, these are just predictions, no one knows what will really happen with crypto in the next 2 years.
That said, it’s pretty obvious that the crypto industry is in a secular bull market and whether the cycle plays out similar to the last or not, we know that there is plenty of growth potential left.
Some tokens will go up 100x to 1000x in price, some will 5 to 10x and some will go to 0.
Today’s report is going to help you capitalize on this opportunity, by designing your portfolio to limit your risk and guarantee you capture some of the upside, while setting yourself up to hit a few 100x or 1000x’s too (...and maybe a couple investments that'll go to 0 too 😅).
The specifics of how much you invest, what you invest in and all the other details will depend on your unique situation, however, I will do my best to give you a clear framework to pack your bags properly for any unique individual.
Let’s get to work…
Before You Buy Anything
The best place to start is to do a bit of work to understand the type of investor you are as well as your purpose and time frame for investing. You need to consider the following:
Why are you investing?
How much are you investing?
How frequently are you investing?
How long are you investing for?
How active do you plan to be investing? (Daily/weekly/monthly trader? Buy and hold? Play the cycle? etc.)
For most people, investing in crypto is something we do on the side. We have a full-time job where we earn income, have bills to pay and crypto is something we invest in part-time or casually (even if we check the charts hourly 😂 – if this is you too, reply with a ‘GM’).
This is the group that I will cater most of my thoughts to in this report, though I will of course touch on other potential situations throughout as well.
I recommend you take a second now to grab a pen and paper (or a blank Google Doc) and write down the answers to the above questions.
If you’re writing this down, make sure it’s in an empty journal! You should take proper notes from this report, last week’s report and the upcoming “When To Sell Plan” PRO report coming your way soon.
I recommend you keep it all in one place as a big ‘bull market plan’.
Ok, let’s look into how to design your portfolio assuming you have a lump sum of money already invested (or ready to allocate) and you may or may not also be dollar cost averaging a percent of your paycheck every month.
Designing Your Portfolio
First things first, wrap your head around this one fact:
The least risky crypto asset appreciates by 150%/year on average if you hold it long enough…
I will repeat this in a different way.
Bitcoin, the least risky asset in crypto, which is almost a guarantee at this point, has increased 150%/year on average for the last 12 years.
For context, 10-15%/year on average over the long term would put you near the top for performance in the TradFi world. 🤯
While many people come to crypto for that dream of 1000x, the probabilities are that you’re not going to hit it. And even if you do invest in the token that does do a 1000x, the chances that you time it perfectly to actually buy the bottom and sell the top to make that 1000x is almost 0.
…Not to mention the amount of other tokens in that same risk class that will go to 0 that you’ll hit along the way too.
I’m not saying don’t swing for the grand slam, but the fact that there are assets in this industry that will get you 150%/year on average is unbelievable.
Ask yourself, would you rather have a 99.9% chance of not winning anything but a 0.1% chance of winning $10 million, or a 95% chance of winning $100,000?
I hope you said both, because that’s how we’re going to design your portfolio. 😉
The framework here is simple and broken into 3 parts.
1. Portfolio Diversification
Think of your portfolio in 2 specific segments. Low-risk and high-risk assets.
1️⃣ Put 80-100% of your portfolio in the lowest risk assets (more on what these are below).
This is like taking a guaranteed walk to first base, everytime you get up to bat. You would have the highest on-base percentage in the MLB if you did this.
For those who don’t get the baseball reference, this is like having a guaranteed 150% return on every $1 you invest each year.
2️⃣ Take the remaining 1%-20% of your portfolio and put it in higher risk assets (if you want to).
Swing for a double, a triple or for the fences on this if you want. Whatever you do, assume this amount is $0 at the end of the cycle.
For the second part of your portfolio, as you think about what investments to make, understand that you aren’t measuring that investment against the dollar anymore.
It does not matter if they go up 100%, 500% or 1000% against the dollar. You’re now measuring against the first part of your portfolio.
When you think about the risk/reward of these investments, if they don’t have the potential to significantly beat the first part of your portfolio, then that money is probably better off in the low risk assets.
2. HODL (Hold On For Dear Life) or Sell?
The second part of your portfolio design is about what % do you plan to sell and what % do you plan to hold onto long-term.
You don’t have to do just one or the other. I recommend using the 80/20 rule again here, though this heavily depends on your unique situation.
For most people, I recommend investing 80% for the long-term (5-10+ years) and 20% short-term (selling at the top of this cycle).
One recommendation here is that if you’re going to sell anything this cycle, make sure it’s your high-risk assets.
These assets tend to go down by 90%+ in the bear market, whereas your low risk assets like Bitcoin and Ethereum were down around 70% the previous cycle and will likely be even less this time around.
Maybe you also want to sell some of your low-risk assets too, that’s fine. Again, it all depends on your goals and what you’re selling for (I have more details on this in an upcoming “When To Sell Plan”, so stay tuned!)
3. FIAT or Crypto?
Finally, the third part of your portfolio design is about how much do you want to remove from the crypto ecosystem and put back into FIAT, and how much do you want to leave in crypto (assets/stablecoins).
Again, this all depends on your unique situation. Some of you may be investing to put a down payment on a home, buy a car or get out of debt, whatever it is, you’ll need to move some of your crypto back into the fiat world to do this.
There are a couple reasons why I highlight this now while you’re building your portfolio, rather than discussing this in the when to sell plan.
1️⃣ Taxes.
If you know you’re going to sell some Bitcoin or ETH in the short term, you might be better off purchasing ETFs or Trusts in your tax-free savings accounts (401K, TFSA, RRSP, etc. depending on where you live).
Every country is different here in terms of what assets are available on stock exchanges (in Canada we already have spot Bitcoin ETFs for example) as well as what tax-free vehicles exist.
If you plan to sell crypto in the near term, use these! You immediately save 20+% on taxes.
Now I know some of you might be saying: “But Kyle, these are just paper versions of crypto and you don’t actually custody them”.
And to those people I would say… “who cares!” I’m selling it soon anyway, why do I need to custody them on my Ledger?
I hold plenty of crypto onchain that I plan to never sell, which I hold because I believe in self-custody and permissionless money. But that stuff doesn’t matter for the bag that I plan to sell this cycle.
2️⃣ Fees.
It can be costly to move your fiat in and out of crypto. Most exchanges take a 1%+ fee at least each way.
Let’s say you’re moving $100k in and $500k out (because you 5x your bag of course!), that’s $6k in fees.
Again, if you know you’re going to sell a certain amount of crypto back into fiat, you might be better off holding it in a traditional exchange. It costs $0 to move fiat into and out of a traditional exchange and around $5-$10 to purchase the ETF or stock.
Most high-risk assets don’t exist here, so that’s where things get a bit tricky, but for me, I have a stack of $ETH in an $ETH ETF within a Tax Free Savings Account (TFSA).
This is the stash that I plan to sell this cycle and buy things in the real world with.
I’ll discuss more on this in the When To Sell Plan, but this is something for you to think about before you start allocating your capital.
Ok, now it’s time to figure out what assets to buy. Let’s specify what a low and high risk asset is.
Allocating to Low-Risk Crypto Assets
99.9% of all assets in crypto should be considered high-risk assets. Shit, even most stablecoins in this space should be considered high-risk.
To call any asset in crypto “low-risk” would make most TradFi professionals laugh.
But we aren’t TradFi. We don’t care about boring old government bonds, shiny rocks or paper equity. We care about onchain assets and real gains.
A low-risk asset in crypto will still go up multiple X’s in a bull run and fall 70% in a bear market, the key is that we know they won’t die. We know they will once again reach all time highs.
Here’s how I consider an asset “low-risk” in crypto:
Product Market Fit: More and more people continue to actually use it overtime (years)
Network Effects: More and more people rely on it for various things in life
Battle Tested: It’s been through bear markets and bull markets and hasn’t died
It is truly decentralized, putting it out of fatal regulatory/hacker crosshairs
There are of course more things that we can consider to understand if something is “low-risk” in crypto, but generally this covers the basis.
Currently there are only 2 assets that fit into this category.
Bitcoin and Ethereum.
I’m not going to get into all the details of the two chains or their assets as we have plenty of other content on that.
But ultimately, when you think of what assets are the farthest along in everything mentioned above, it’s these two.
This shows in their market cap vs. every other asset in the space.
Yes, other assets will outperform $ETH and $BTC. Yes, other blockchains will likely succeed too. Yes, other assets are doing great things too. I don’t care.
What I care about is not losing money, and holding $BTC and $ETH long-term are the only almost guaranteed way of doing that while still being exposed to crypto.
I know many of you are wondering, well what about $SOL? While I do NOT put it in the low-risk category yet, I see it as the only other asset in this space that is close to reaching a point of Ethereum and Bitcoin status and legitimacy.
Solana still has a lot of work to do to reach this point, but it’s the clear winner for next up and an asset that I think is a must-own. While I still wouldn’t put it in the “low-risk” portfolio, it’s likely to get there by the end of this cycle (do with that information what you will).
So to wrap up here, my recommendation is to take 80-100% of your portfolio and put it into $ETH and $BTC. I’m heavily weighted in $ETH over $BTC as I believe it has a lot more upside, but I will let you decide this preference for yourself.
By holding 80-100% of your portfolio in these two assets, as well as dollar cost averaging into it on a monthly basis, you are enabling yourself to earn 150%/year on every dollar you invest at a fairly certain level. This ensures that you guarantee the upside of this space.
There would be nothing worse than being in crypto this early and ending up with nothing years later because you didn’t buy the “for-sure" thing and went all-in on shitcoins (this happens to many people in their first cycle).
Allocating to High-Risk Crypto Assets
Now that you’ve locked in your gains for the cycle, it’s time to head down the risk curve. This part of your portfolio can include anything below the top 2 crypto assets by market cap. It can be tokens, NFTs, inscriptions or whatever else this industry creates for you to invest in.
These are your 50x, 100x, 1000x moonshots. While these can bring big time winners, it's important to understand that most of these won't be. Many will go to 0 and 99% will go down 95%+ when the bull market stops.
Investing in the world of crypto (outside of the for-sure things) is not easy. It takes time to research, it takes time to understand and it takes hard work to keep your finger on the pulse. These tokens generally move fast and run based on narratives.
One thing to note, you don’t NEED to include this part in your portfolio. If you don’t have the time or want to just buy and forget about it, just stick with the first part and forget about this.
If you do want to go down the risk curve, below I will share a few quick tips. A deep dive on this topic is out of scope for this report, as it would take hours to explain, however I do have numerous lessons on this topic in my Web3 Investing Masterclass.
As a PRO, you get 50% off by connecting your PRO Pass here.
As a Founding member, you get it for free by connecting your Founders Pass here.
In this Masterclass, you’ll learn how to find good projects, understand tokenomics and value accrual, narratives and so much more. If you want to make investing in web3 your thing, I highly recommend you take this Masterclass.
Otherwise, here’s some quick notes:
1️⃣ Invest in what you know and understand. For example, if you’re a gamer, go play web3 games, see what you like and invest in those.
2️⃣ Do the research. Most people in this space don’t put in the work. If you actually put in the work you have a massive upper hand.
3️⃣ Use the tech. Most people don’t do this either. Just use it and judge it for yourself, you’ll be surprised at what crap “influencers” tell you to invest in.
4️⃣ Concentration makes you rich, diversification keeps you rich. If you don't have a lot of money, don't try to buy too many positions, you will end up minimizing returns and focus.
Instead, do the research, find the best assets and build out your conviction, then allocate.
Follow along on that asset's journey, that’s how you hit the big plays.
5️⃣ Don’t chase pumps and FOMO. Pack your bags now (not when we’re back at all time highs). Get into good projects early on and ride them up the cycle. This is the ONLY way you will get your big returns.
6️⃣ Measure your token returns against $ETH (or $SOL if investing in the Solana ecosystem) not $USD.
You might think you’re doing well, especially in the bull, in dollar terms, but if you hold on too long, these lower-risk assets will quickly outperform your shitcoins once the mania is over.
PRO TIP: Grab some $SOL for this cycle.
$SOL = 12% of my total portfolio. While $SOL didn’t make it into the 1st section of the portfolio, it should make it in here.
I believe Ethereum and Solana will become the 2 dominant platforms for onchain applications, similar to Android and Apple for mobile phones.
I bought at $20, $28, $30, $35 and recently at $55.
You can stake your $SOL with Jito or by delegating to validators directly in your Phantom wallet and earn 7% on your $SOL.
This is such a no brainer investment, even after the current run up. Don’t miss this one! In case you missed it, learn more about my bullish case for Solana here.
Ok, let’s wrap up with the final stages of your portfolio design.
Dollar Cost Average
Once your bags are packed, it doesn’t have to stop there…
My recommendation is to continue to dollar cost average into the crypto ecosystem on a monthly basis.
Just like tech stocks over the last 20 years, there really is no better strategy to grow your wealth when investing in an industry experiencing a secular bull run.
Of course, the above tips help us take advantage of a particular short term cycle within this secular bull run, but long-term we want to continue to grow our exposure to this space.
That’s where dollar cost averaging comes in.
So long as you have profit each month that you are able to invest (income - expenses = profit), my recommendation is to take a certain % of that profit and consistently deploy it into crypto. The % that you decide depends completely on your unique situation.
I recommend a certain % remains in cash, a certain % in other investments (real estate, equities, etc.) and a certain % in crypto.
These percentages should change depending on where we are at in the cycle. For example:
During this bear market, I have put 60% of my profits each month into crypto, 30% into cash and 10% into equities. I do this ratio because I believe that during the last 1.5 years, crypto has been significantly undervalued.
The risk/reward buying crypto while it's at cycle lows is much better than buying at cycle highs.
Once we reach previous all time highs in $BTC and $ETH, this signals a big change in markets.
It means we are in a full on bull market and while I think the crypto ecosystem will continue to do multiples higher from previous all time highs, the risk/reward becomes much worse.
At this point, I will flip my percentages and begin putting 60% of my profits in cash and only 30% in crypto. The 10% equities will depend on what I’m seeing in those markets.
While this might mean I’m leaving some gains on the table for this cycle, what I’m really doing is building up cash reserves to deploy during the next bear market (or into something else). I’m also building a base of cash incase I need to buy something or pay for a random emergency (ie. health issues, home renovations, car repairs etc.).
The last thing you want is to become a “forced seller”. Imagine your car breaks or you need to fix something in your home, yet you’ve been putting everything you have into markets.
Now you need to sell your crypto and create a taxable event. Even worse if this happens while markets are on the way back down!
Being over exposed to crypto was the mistake I made last cycle. Thankfully, I have ongoing income so I was never a forced seller and I could continue to buy during the bear, but if I was accumulating cash later in the bull run, I would have had more capital to deploy at the lows of the cycle.
Also for many, a bear market means tougher economic conditions. Meaning, you might make less or lose your job, during the most optimal time to be buying assets.
Dollar cost averaging monthly will remove a lot of the noise around trying to time the markets. Additionally, altering your % allocations depending on where we are in the cycle can be a great way to optimize your portfolio with no additional risk or noise.
Enjoy The Ride!
There it is. A framework to pack your bags for this bull run.
A framework that will limit your risk, guarantee your upside to the crypto space and give you some moonshots for the big gains.
All while saving on fees and taxes for what you plan to sell this cycle.
Sure, you could forget about this and gamble it all in shitcoins and nothing else. Most people will end up doing this. But your chances of success are small.
By implementing the framework above, you’re setting yourself up for success in this space long-term. The key is packing your bags early enough and sticking to the plan from one cycle to the next.
If you weren’t allocating throughout 2023 like we have been recommending all year, it’s ok.
My best guess is that we are only about 15% of the way through this cycle, as we’re yet to reach the mania phase or even solid altcoin rallies.
So there’s still plenty of upside left.
Do your research, get allocated in the right places at the right percentages for you and then your best bet is to do very little afterwards.
Like I said in last week's report, once your allocated, your main goal now is to not fuck this up!
Thanks for reading. And remember, you're strong, you’re powerful, you’re alpha! ❤️
How'd you feel about our read today?
ABOUT THE AUTHOR
Kyle Reidhead
Founder of Web3 Academy and Impact3
Find him on Twitter
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Disclaimer: This article is for informational purposes only and not financial advice. Conduct your own research and consult a financial advisor before making investment decisions or taking any action based on the content.
