Monthly Crypto Portfolio Update (April 2020)

It was interesting to see how the crypto asset market correlated so much with the traditional financial markets in April as the market capitalization went from $179 billion to $244 billion which represents an over 30% increase which was very similar to the jump in the equities market as well. After the plunge in March due to liquidations of everything not cash, funds flowed back into bitcoin and others to make an interesting formation in charts as many have taken out the levels they were at before the plunge due to the health crisis in March.

Chart from CoinGecko

Bitcoin continues to lead the market and will likely do so as we are now days away from the halving which many say is the recent catalyst for price increases. However, will this catalyst be enough to breakthrough heavy resistance levels or will it be another “sell the news” event like that of Litecoin last year after its huge run up? I believe it will also depend on the sentiment of the capital markets as liquidity continues to be key among many participants. Given the actions of Central Banks around the world, liquidity is readily available which could help the crypto asset class continue it's bullish trends.

April for me was a perfect example of the problem of trying to buy the bottom. After the plunge in March, I have been wanting to buy the dip as I missed the original opportunity due to the lack of available capital. However, I was able to move assets in April and now have capital ready to deploy. However, by the time it was available, prices had already jumped 20% so I was afraid of a retest of the bottoms as I have been in the equity markets. I have turned out to be wrong on both side and have actually lost some capital with some hedges I made. Fortunately, I never bet the farm and am ready to make a reset to deploy the capital when given the opportunity. I am waiting for the halving to be behind us to assess prices and select my areas to play in.

In addition to avoiding chasing prices this past month, I was also concerned with the issues that have plagued the Decentralized Finance (DeFi) movement this year. The series of exploits that occurred was concerning and the inability for the MakerDAO project to avoid the issues with the crash of collateral prices was also something that caught my attention. I have yet to really research the technical aspects of these situations but I know that just the headlines are enough to delay the growth of adoption of DeFi in the short-term. However, I continue to see DAI as a great bridge asset into crypto so I continued to add my monthly contribution to my holdings for future allocation. This did not impact my allocations very much as it was my only purchase during the month.

Also, this is the first month that I have included the proceeds from my home sale in the invested assets section. That materially reduced my allocation to crypto in my invested assets portfolio as expected. However, it will probably be a short term impact and will actually lead to more into crypto as I hope to deploy some of that capital into crypto in the coming months as I settle what I will be doing with those funds. It is a very uncertain time regarding our financial positions so slow and thoughtful decisions should be warranted in order to be properly rewarded once it is all behind us. Technology only advances more so the potential of Blockchain and Crypto remains very encouraging in my opinion!

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