I have just sold my Bitcoin Cash holdings in their entirety.
Right away, let’s get a few things straight:
1. I have nothing against the Bitcoin Cash project. Not the coin, not the community, not even Roger Ver. The reality is that I support the Bitcoin Cash project. In fact, I prefer the non-SegWit approach of Bitcoin Cash to that of Bitcoin itself. I’ve said it before: had Bitcoin Cash not changed its block size when it forked, thereby immediately differentiating itself from the legacy code of Bitcoin at the time, Bitcoin Cash could have been what we call “Bitcoin” today!
2. I am not recommending or even suggesting that you sell your Bitcoin Cash holdings.
3. This has absolutely nothing to do with the recent Bitcoin Cash fork. I’ve already dealt with that in “Small altcoin investments – A Case Study”.
As always, this post is information, information which YOU, dear reader, must process and incorporate into the making of YOUR OWN decisions.
It pains me to watch people delegating responsibility for their own crypto decisions. Investing through trusts, letting exchanges hold their coins, using third -party staking solutions, crying to government when investors run off with their money. That’s NOT the spirit of crypto! Be your own bank, make your own decisions, take your own wins, and take responsibility for your own losses.
That’s enough of the lecture.
Yet here I sit, without a single satoshi of BCH to my name. So why did I sell? What prompted me to consider the continued hodling of my BCH as a potential bad move?
This Tweet did:
Yes, it is my own Tweet.
As the Tweet says, I don’t often look at Litecoin in much depth. I did the bulk of my LTC research and projections years ago. Changes in the big cap coins happen relatively slowly, so I tend to ignore them.
When I noticed that LTC seemed poised to perform well, I went to my charts and spreadsheets and starting running the numbers. I soon realised that it could be potentially profitable to me to shift my position from BCH to LTC.
That analysis proved difficult. There are many comparison metrics available, and choosing the right ones is no simple task. Do you look at volume, adoption, price, current trends, historical trends, number of users, number of active wallets, number of new wallets or do you just look at everything? (Of course that list is only a sample set of what is available for analysis).
I looked at everything of value which I could find. It wasn’t a deep dive, I already know the coins and where to find good information about them. I spent maybe half an hour comparing LTC with BCH.
But to see a coin and fixate on it (LTC in this case) is a logical fallacy. That ignores all the other alternatives, a mistake which I did not wish to make.
Keeping it in the family
The reason I turned to BCH when I was looking for funds with which to purchase LTC is a simple one: they are very similar coins.
Both are proper currency cryptocurrencies, widely adopted, easy to trade, forks of Bitcoin, reliable, fast, cheap to use etc.
I did not want to exit an entirely different sector of the market in order to fund an LTC buy, I wanted to swap one dedicated “second-tier currency” for another.
It is my continued belief that the “Digital Gold” description of Bitcoin is an incredibly accurate analogy. For the purpose of this post, the takeaway from “Digital Gold” is that Bitcoin is far more a Store of Value than what it is a Means of Exchange. Bitcoin is undoubtedly my primary Store of Value cryptocurrency, I question the judgement of any crypto investor who uses any cryptocurrency other than Bitcoin as their primary store of crypto value.
But as crypto adoption grows, (and boy is it growing!) so the importance of Means of Exchange coins will become increasingly apparent. Nobody wants to trade their Gold just to buy a Kindle on Amazon. Nobody wants to pay a $10 transaction fee (and rest assured that those will return to Bitcoin) to buy a $20 item. And so it is that the “second-tier currencies” will become hot commodities – bearing the weight of smaller crypto transactions. You won’t buy your Starbucks coffee with BTC, but you may well use LTC or BCH!
Of course the more deluded souls will point to the rise of stablecoins and their use as a means of exchange. “Great idea,” I will tell them, “why don’t you invest in USDT today, while I invest in LTC. 10 years from now we’ll compare notes and see whose investment was better!”
There are two things I like about stablecoins: their ability to smooth the transition of fiat into crypto – thereby onboarding a lot of funds into the crypto realm, and their ability to scare the living daylights out of central banks. Beyond that I want as little as possible to do with them*.
As another old favourite, and – like Litecoin – a coin which I already hold a position in, I did also consider transferring BCH value into Dash. Because I already held LTC, I did not want to create a lopsided, overly-LTC-heavy portfolio. Dumping all of my BCH into LTC would have left me over-exposed in LTC. But Dash does not look as strong as LTC, unfortunately it doesn’t even come close. The reality is that funds stored in BCH are probably better off than funds stored in Dash (nothing against Dash either, I’m merely stating the facts as I see them. Yes I could have sold my Dash too, but for reasons beyond the scope of this post, I didn’t).
So I needed other alternatives into which I could split my BCH funds. More about those a little later.
Buy High, Sell Low
Ah! My favourite old trading strategy!
Buy them when they’re hyped and expensive, and sell them when they crash to the bottom! It’s an all-too-common yet ridiculously silly practise. Or is it?
Were I to have sold my Bitcoin Cash into fiat, then yes, it would have been a terrible move at this time. BCH has nowhere near recovered its former glory, and the money I have put into it since the BCH fork would have realised an instant loss had I been stupid enough to have sold into fiat.
To determine “loss or profit”, or to put it another way: “good move or bad move”, I had to project what my money would have been worth had I left it in BCH, versus what it would have been worth invested in something else.
It is my belief that Litecoin will outperform Bitcoin Cash. That is what the results of my analysis indicated, and it is based on that analysis that I decided to trade my way out of Bitcoin Cash and into other things. If I am correct about this, and I should stress that there is no guarantee of that, then my “Sell Low” strategy for BCH is logically sound.
What I have done is to position myself to catch a bigger bounce than what I would have caught had I stayed in BCH. At least, that’s the theory. As Woody Allen says: “If you want to make God laugh, tell him your plans.”
So I sold all my Bitcoin Cash. But what to buy? I’ve already covered Litecoin – LTC is a given – but what about not overloading my portfolio with LTC? What about the unsuitable DASH? What is a Bit Brain to do? I’ll tell you what a Bit Brain did do:
Consolidation (and whining about token swaps)
I’m experiencing some problems with my crypto portfolio. They are not unexpected, but they are nevertheless annoying.
Being the holder of many different currencies, my crypto holdings keep me busy. I have made a marginally successful conscious effort to decrease the number of coins in my portfolio. Despite that effort, I still track over 60 coins on my crypto tracking spreadsheets, which remains problematic.
For example: I am absolutely SICK of token swaps. It’s gotten so bad that I’m almost at the point of saying: “If you announce a token swap, I’ll sell immediately rather than go through the swap process”. I don’t mean those token swaps which happen neatly behind your back and without any need for your participation – like several projects (e.g. Covesting) did after the recent KuCoin hack, I mean the OTHER ones!
I did do that with Opacity not long ago. They announced a swap, and I sold. The reason was simple – effort and expense. More on that below.
A week or two ago I was swapping Stratis (previously “STRAT”, now “STRAX”) in what can accurately be described as an absolutely nightmarish process. The swap documentation which Stratis published was so incomplete, so absolutely abysmal in scope, readability and practical use, that there was no way on Earth that many STRAT holders could have completed the swap using it alone.
I was forced to turn to Discord and consult their (admittedly helpful) “help line” in order to complete my STRAT/STRAX swap. But the information which I received on Discord SHOULD HAVE BEEN IN THE SWAP DOCUMENTATION! Not only that, it should have been stated simply for the various different cases and scenarios. For instance, there is NOTHING in the documentation about third-party wallet swaps. (Those poor guys helping the people on Discord are VERY busy!)
When development teams are as careless and unfocussed as this, I dump their coin. Such utter lack of foresight and vision is a massive red light for me. It’s a clear indication that “leadership” is only a word in such a project, there is none present within the project management team (or at least, not at the top of the team, where it can be of use). When I see that in a project, I can be assured of future failure, and I dump the project. Bye bye STRAT, or STRAX, or whatever your name is. You can’t even get the simple little things right, how can I possibly trust you with building an entire crypto ecosystem?
Now I have to swap my Golem Tokens, GNT tokens for GLM. Admittedly, the Golem swap mechanism looks far easier and is not time limited (a rare and welcome approach), though in fairness I can’t comment authoritatively since I haven’t attempted it yet.
But why swap? Yes, I’ve read their documentation about needing an ERC-20 token (Golem predates ERC-20), but then my question becomes “Okay, so why did you issue a non-ERC-20 token in the first place?” Could they not have waited? Why build a computer-based system on an architecture which is not fit for purpose? You KNOW that’s going to cause issues later on! Either you have something fit for purpose – and issue your tokens, or you don’t – and then you wait. Anything else really messes your investors around!
To be clear, I’m not talking about the upgrade of a major crypto backbone system like Ethereum or EOS or NEO. Those are essentially “operating systems” which will need periodic upgrades to stay relevant. I’m talking about projects which issue tokens on such networks. A token is nothing more than a little snippet of code, a smart contract which SHOULD NOT NEED TO CHANGE in order to execute its functions! If you need to make major changes to your smart contract, then it was probably a bad contract to start with! You either didn’t plan properly, or you didn’t audit your code properly before making it public!
Am a just a drama queen making much ado about nothing?
Well, no. I say so because this has real life monetary implications for me. I started buying Golem in July of 2017. That’s over three years ago and there was no talk of a token upgrade (at least not that I heard) until recently. I bought the majority of my Golem back in September of 2017, at a price of 8318 sats. That was before the mad altcoin rush, so sorry, you can’t pin this one on me falling for FOMO and hype. My problem today is that Golem has yet to recover from the 2018 crypto winter – at all. At a price of 650 sats now, my Golem has lost well over 90% of its value since I purchased it. Note: that’s from purchase, not from ATH which is a FAR greater loss!
In real life this means that the cost of an Ethereum swap transaction has become an appreciable percentage of my total Golem holdings. While never “impressive” in size, at time of purchase they were worth 12.8 times what they are now. So if, for example: I had paid $1 to transfer $100 of Golem in 2017 – a fee of 1%, that same transaction today (still at a transfer cost of $1) would cost me 12.8% of my Golem holdings! And if, as is normally the case with swap transactions, I have to pay to send the old tokens AND to receive the new ones, then I would walk away from the swap having lost over a quarter of my investment in fees alone!
Blame me for holding the dip if you like, blame me for buying into small projects, blame me for whatever, but that is the reality for many small project holders that have been faithfully hodling small bags for several years, waiting for the projects to re-emerge an succeed.
To now punish the loyal hodlers of small bags from yesteryear is a GREAT way to shoot yourself in the foot. Wave goodbye to your most loyal old supporters. Golem, you have a strong chance of being dumped as well. Where once I would have recommended you, now I look upon you with suspicion and disdain.
What that whining serves to illustrate is that I’m so over running around after crypto projects, jumping through their hoops and spending money on them. That’s not an investment, that’s a ****-up!
To return to the topic at hand, I therefore want to consolidate my holdings as far as possible. This is difficult to do when also following the precept of diversification. Combined with income from staking coins and the temptation of new projects, it takes considerable resolve to keep reducing the number of eggs in my crypto basket!
With that in mind I only bought coins which I already hold. As usual I looked for the best deals I could find, coins which are cheap right now and which look like good investments (preferably better than BCH, lest I regret my decision later!).
What I bought, and why
I’ve already spoken about LTC at length, so it shouldn’t be a surprise that I put most of my BCH money there. Finding coins to support it was tricky, especially the always painful decision of how many different coins to buy. To make things simpler, I let the exchange narrow my options. My BCH was still sitting on Binance (where I had shifted it for the Bitcoin Cash fork), so I decided to only buy coins available on Binance, thereby dodging incurring yet more transaction fees.
I started off by spending 38% of my BCH-derived funds on LTC.
For my second choice, I still really wanted another currency coin, to “keep it in the family”. With Dash out of the equation, and with other dedicated currencies like NANO being so far away in market cap, it was actually not a hard decision to settle upon Monero. The added benefit of Monero is, of course, privacy. I was late to the Monero party and have been looking to increase my investment there. (I got stuck in ZCash early on, a bad mistake. ZCash and I are no longer friends.)
I still believe strongly in privacy coins and see them becoming vital to the future of crypto-anarchy as regulations on the crypto space are increasingly complied with by the more centralised crypto projects and exchanges. Consequently, they should be excellent investments.
I spent 23% of my funds on Monero. Combined with LTC, that kept 61% of my old BCH funds in the second-tier currencies “family”, a figure with which I was satisfied.
But what of the remaining 39%?
In my last post mentioned “Small altcoin investments – A Case Study” I spoke of how I spent my BCH ABC funds from the hard fork. To cut a long story short, I bought Voyager Token and Everex. Since nothing fundamental has changed since then, I bought them again. I spent more on Voyager Token (VGX on most exchanges, but BQX on Binance) than on Everex (EVX), because I hold a greater percentage of the total token supply of EVX than what I do of VGX. (This ancient post explains how much you should buy of each cryptocurrency you hold.)
So I spent another 15% on VGX and 8 % on Everex. They’re both payment coins (and good investments – or so I’d like to think). The entire rationale behind buying them is explained in detail in “Small altcoin investments – A Case Study”. You may find it well worth a read if you’re looking for medium-level market cap coins to invest in.
That leaves 16% of my BCH funds remaining, with which I executed a two-way split between Ontology (ONT) – it’s great value at its current price, and Binance Coin (BNB) – a coin which I already hold a relatively large amount of, but which I see becoming increasingly dominant in the world of crypto.
That’s it. Another sale, six more consolidation buys and another coin exited. Well… another few coins if you count Stratis, Opacity and maybe Golem too.
I hope that my decisions may help you with your own. And please, do make your OWN decisions. But please, do proper research first. More than anything else, this Covid-19 crisis has revealed the utter inability for individuals to make up their own minds and to do exhaustive research. The opinions of a few YouTubers, Twitter users and Facebook friends is NOT research! It’s lazy and it’s delusional.
Leave delusion to the XRP zealots.
* I may consider using stablecoins as a temporary and partial store of crypto value during the next major crypto crash, maybe around two years from now. How and when I will do that, if at all, remains to be seen.
Yours in crypto
All charts made by Bit Brain with TradingView
“The secret to success: find out where people are going and get there first”
~ Mark Twain
“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful”
~ Bit Brain