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Health, Wealth, and Happiness

March 31, 2023

"Know what you own, and know why you own it."

— Peter Lynch

In today's issue: Nearly five years ago, we started our Blockchain Believers Portfolio and we've been tracking the results every quarter.

Today, some good news: Blockchain Believers are ahead of traditional investors... Way ahead.

To see the eye-popping returns and an exploration of whether our industry-leading approach still makes sense in these uncertain times, read on.

Must Read

Today's most important story for crypto investors.

Staked ETH Withdrawals To Activate On April 12

(The Defiant)

News that Ethereum is activating both the Shanghai and Capella upgrades (now being called "Shapella") has Ethereum stakers excited because it will allow for the withdrawal of staked ETH. The upgrade has been a long time coming.

Roughly 15% of ETH’s supply (worth roughly $32.3 billion) is currently staked.

Current ETH staking metrics via Dune Analytics.

Because there are worries that too many will unstake their ETH all at once, the Ethereum Foundation will be imposing a cap on withdrawals of roughly 2,200 staked ETH withdrawals per day.

While that may be troubling in the short term, it's expected that long-term staking on ETH will increase now that there's no lock-up period when staking.

Will this drive Ethereum's price up even further on the excitement of yet another technical achievement? Or will it drive it down, as stakers begin to unstake and sell their ETH?

Long-term, it's a good thing. Short-term, it's going to be a wild ride. Buckle up and stay subscribed.

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Blockchain Believers are Still Ahead. Way Ahead.

by John Hargrave

It’s been a gloomy few months for crypto investors, but today, I come bearing good news.

Our Blockchain Believers Portfolio, started back in 2018 with the publication of my crypto investing book, is still delivering eye-popping returns.

If you’re just joining us, the idea behind the portfolio is simple:

Step 1: Invest in stocks, bonds, and a small percentage of crypto each month.
Step 2: Set it up on an automatic withdrawal system using tools like Coinbase and Betterment.
Step 3: It's so easy that there is no step 3.

(Full instructions here.)

Someday, this approach will just be common sense, especially as we continue to report outstanding results quarter after quarter, which brings us to our good news.

The Good News

Here are the results as of Q1 2023. Our approach has generated incredible returns without adding incredible risk:

The “Non Believer” portfolio is stocks and bonds only (no crypto). The “Baby Believer” has 2.5% in bitcoin, and the “Big Believer” has 5% in bitcoin and 5% in Ethereum.

Even if crypto collapses, you’re only down a maximum of 10%.

So far, of course, crypto has not collapsed over the long term; it has thrived. What’s remarkable is how much Ethereum has thrived.

Ethereum is the Secret Sauce

Imagine you invested $10,000 in both bitcoin and Ethereum in 2018 when my book was released. Here’s how both those investments would have grown using the S&P 500 as a benchmark:

Your investment in bitcoin would have quadrupled, but your investment in Ethereum would have increased sixfold in less than five years.

If we dig into the fundamentals, it's even more striking. A few weeks ago, I showed you How to Read Crypto Financial Statements using Token Terminal’s new financial reporting feature. Here's a side-by-side comparison:

Stats are taken from Token Terminal financial statements, Q1 2023

Still, there are reasons to keep the faith on bitcoin. It’s the OG crypto. It’s got the most users, the most history, and the most market cap. It’s still got the biggest global brand recognition.

In the midst of ourslow-motion banking crisis, there are signs that our investing philosophy is finally beginning to sink in. In this morning’s New York Times, the CEO of the technology startup Bouncesaid:

“Having a couple percent in bitcoin feels like a really great insurance policy on the U.S. dollar, on the banking system, on the Fed, on the whole infrastructure” (emphasis ours).

This is Bitcoin Narrative 5.0. It’s an insurance policy on the traditional financial system. The idea is to have a couple percent in bitcoin.

From Bitcoin Market Journal to the New York Times, it’s finally sinking in.

The Bad News

In the interest of transparency, I must also report on the results of our Future Winners portfolio, the all-crypto portfolio we launched in July 2021:

We started our Future Winners portfolio for people who wanted to invest beyond bitcoin and Ethereum. This is an all-crypto portfolio of just four tokens (weighted at 25% each).

The biggest difference, however, is that we launched it in July 2021, just as a great bull run was beginning (in fairness, the S&P 500 is also down 6% from July 2021, so we've all lost money).

Our view: give it time. We’ve had five years on the Blockchain Believers Portfolio, but less than two years on the Future Winners Portfolio. We still believe in the long-term potential of these four picks. Keep calm and HODL on.

It’s All Risky Business

It’s always risky to be a crypto investor, especially now. As the U.S. government tries to sue, tax, and cut off crypto companies from the traditional financial system, many investors are asking whether it's all worth the risk, but isn’t the traditional financial system feeling progressively riskier as well?

Our Blockchain Believer Portfolios are at least 90% invested in stocks and bonds. We have just a tiny slice of the pie allocated toward crypto to share in the reward without taking on all the risk.

Or, to quote the CEO in the New York Times, “a couple of percent in Bitcoin.”

The question today is not, “What is the risk of investing in crypto?” It’s, “What is the risk of not investing in crypto?”

Life is risky. You take a risk every time you fly a plane, drive your car, or eat prepared food. We risk everything, everywhere, all the time. The only reason we’re not paralyzed with agoraphobia is that we push the risk out of our minds.

With financial risk, we can’t afford to push it out of our minds, but we can mitigate risk with a well-diversified portfolio. Ideally, we invest in non-correlated assets (i.e., when some go down, others go up, and vice versa).

That’s the idea behind the Believers Portfolio: stocks, bonds, and crypto, each on their own track. Within stocks and bonds, you’ve got the entire stock market and the entire bond market, so you’re even more well-diversified.

"A couple of percent in crypto" diversifies us further still, giving us some peace of mind no matter what happens to the current financial system.

As I said in last week’s column, investing in quality crypto projects is investing in a new global financial system; one that’s more equitable and accessible to anyone anywhere in the world. Your investments are powering that change.

Investor Takeaway

Today, investors must ask themselves which is the riskier investment: betting that the financial system will stay the same, or putting “a couple of percent” in crypto just in case things change.

You only have to look outside at the weather to know the only thing constant is change. Blockchain believers have been betting on that change for five years, and they’ve been handsomely rewarded for it.

The good news is that it’s never too late to join us.

Health, wealth, and happiness,

John Hargrave

Publisher, Bitcoin Market Journal

ICYMI