For crypto enthusiasts, things are starting to look a little dicey. Celsius and Voyager have both stopped withdrawals and rewards to participants.
The LUNA crash hasn’t instilled confidence in algorithmic stablecoins. Even “blue chip” cryptocurrencies like bitcoin (BTC) and ether (ETH) are much lower than they were earlier in the year. Bitcoin is back below $20,000 and Ethereum is barely above $1,000.
As a result, many people are wondering what’s next for crypto — and asking what I’m doing with my own crypto portfolio. Let’s take a look at what’s happening and I’ll give you an idea of what I’m doing with my own cryptocurrency holdings.
Why Is Crypto Crashing
Nearly every cryptocurrency is in a bear market right now, mirroring the down stock market. So far, even though there was some speculation that cryptocurrencies would move inversely to stocks and provide a hedge against the market, so far crypto has moved with stocks.
Right now, there’s a lot of uncertainty in the markets, and cryptocurrencies are behaving like many other riskier assets normally behave in times of uncertainty. As we worry about heading into a recession, and as interest rates rise as the Fed attempts to control inflation, many people tend to move out of riskier assets.
Stocks are considered riskier than bonds and cash, and cryptocurrencies are considered even riskier than stocks. With economic and political upheaval and uncertainty, it’s not much of a surprise that there’s a great deal of volatility across major asset classes.
Additionally, crypto hasn’t yet achieved widespread adoption. Cryptocurrencies remain part of a speculative asset class, with no guarantee that blockchain technology and crypto will truly replace our current web infrastructure.
Finally, there are concerns about regulation and the potential for the adoption of digital currencies by centralized entities. Some believe that governments could begin regulating crypto more heavily, while at the same time introducing digital versions of their own currencies. If there’s a digital dollar, the speculation goes, what need is there for other forms of digital currency?
While some believe that decentralized finances and a truly free monetary system requires a decentralized medium of exchange, the masses, in general, don’t appear ready to adopt this approach. They might be more likely to trust a digital currency issued and backed by their government.
All of this is contributing to the current crypto crash. It has many casual crypto investors and speculators spooked, while in some places crypto enthusiasts maintain that the best digital currencies will get through this and be stronger for it.
How Does My Crypto Portfolio Look Today?
My personal portfolio is well up. I was fortunate to buy most of my crypto prior to 2018. Since then, I’ve bought new altcoins here and there, if they seem promising, and even ran a Dogecoin experiment.
I sold half a bitcoin in early 2021 when the price was right around $32,000 and another half a few weeks later when the price was closer to $45,000. I did exchange some ETH for USDT in order to get on a decentralized exchange (DEX) that didn’t accept fiat dollars. Then I bought some PAXG and KCS. However, ETH was at about $2,500 at the time, which was much higher than when I originally bought it f or about $50.
Because the bulk of my crypto portfolio is in BTC, LTC, XMR and ETH bought prior to 2018 (or early in 2018, in the case of Monero), my personal holdings are still well up.
Overall, I’ve probably invested less than $3,000 of my own money in crypto, and I’ve already taken profits many times that.
The portion of my portfolio that I keep in Coinbase, to run experiments and keep a stock for use on DEXs, is much lower, however. These are assets I transferred to Coinbase from cold storage or that I bought on Coinbase. As of this writing, I’m down $548.68 for the small amount of assets that I hold on Coinbase.
So, with my personal position overall still very good with crypto, I’m not in a position to worry about a further crash. I’m lucky in that way. I’ve already taken large profits from crypto, so losing money now is nothing more to me than a tax deduction — if I decide to lock in the losses by selling.
Am I Going To Do Anything New Or Different?
No. I’m not doing anything at all with my crypto portfolio. I’m keeping everything the same. I’ve considered buying more of some coins, with prices so low, but so far I haven’t felt a compelling reason to purchase more of any particular coin. The “blue chips” are still much, much higher than what I paid for them, and I’m not sure any of the alt-coins really have what the staying power to replace the blue chips.
So I’m staying put.
I haven’t even “bought the dip” on any of the crypto in my portfolio. For the most part, I’m just letting it ride. I can’t predict whether blockchain technology really is the future. There’s no way to know whether the regulatory framework many countries are wrestling with will help or hurt crypto. Plus, who knows if technology like hashgraph will leapfrog blockchain and become the true future of web infrastructure?
With everything going on, I’m not interested in making major changes to my crypto portfolio. Instead, I’ll take a step back and see how things go. If I decide to sell some of the coins I’ve had for longer, I’ll need to deal with capital gains taxes. Or, if I sell more recently acquired assets, I can use them to offset gains (or reduce my own income).
For now, though, my approach is more of a “wait and see.” We’re likely heading into a recession and the cryptocurrencies that make it through the current crash are more likely to last a little longer — assuming the whole thing doesn’t come crumbling down, what with issues at Coinbase and rumors of what could happen at Crypto.com.
My Approach To Cryptocurrency Investment
Even though I find blockchain technology fascinating and promising, I also see cryptocurrency as a speculative investment. I don’t know whether it really will reach a critical mass or be widely adopted. So, I limit how much of my portfolio is in crypto. Generally, I like crypto to be between 5% and 8% of my total holdings. (Even though, at one point, when cryptocurrency prices were near their peak, it account for almost 12% of my portfolio.)
When choosing cryptocurrencies, I usually consider the potential use case, and look for a token that has potential value beyond price movements. Additionally, I look at liquidity, since I prefer cryptocurrencies that are easy to buy, sell and trade. While I do have some coins staked, and yield farming has been profitable for me in the past, I don’t rely on those tactics for long-term success. In some cases, we’ve seen that big rewards and returns are short-lived and some of these crypto projects become over-leveraged — or are revealed as scams.
Most of my investment portfolio is boring, consisting largely of stock and bond index products. However, when I do run an experiment, such as investing in memecoins like DOGE or SHIB, I do my best to get in at an early point in the hype. Then, when I double my money, I take those profits. I might leave some invested in the coin, but I prefer to take profits rather than attempt to run them. Likewise, when I receive interest from staking, lending or farming, I convert those returns to fiat currency as soon as I’m able to.
Because I’m a conservative investor by nature, and more interested in taking profits than keeping my money in a risky and uncertain asset, I’ve managed to do fairly well. My overall personal crypto portfolio is way up, and my experiments have yielded good returns — even if I’m not a crypto millionaire.
Bottom Line
Even though I like crypto, I still view it as a speculative asset class, and limit my exposure to cryptocurrencies and other digital assets in my portfolio. Rather than trying to grow my wealth to a specific number, I instead approach investing as a way to support my lifestyle now and in the future. Most of my investments are in index products and I treat other investments as gravy.
As a result, I’m not trying to beat the market, or try to time entrance and exit. Instead, I focus on what helps me reach my own financial goals. As a result, I have what I need, enjoy a little fun with crypto and don’t have to worry as much when the market is crashing.
Miranda Marquit, MBA, has been covering personal finance, investing and business topics for more than 15 years, and covering crypto topics for more than 10 years. She has contributed to numerous outlets, including NPR, Marketwatch, U.S. News & World Report and HuffPost. She is an avid podcaster, co-hosting the podcast at Money Talks News. Miranda lives in Idaho, where she enjoys spending time with her son playing board games, travel and the outdoors.