Bitcoin Investment Strategies To Start Using Now
The Baltic Honeybadger Bitcoin conference has recently ended, and Adamant Capital’s co-founder Michiel Lescrauwaet has presented the firm’s investment strategy. The firm also provided some flowcharts and tips on what strategies individual investors could use, and what’s the right approach.
The “Bitcoin Alpha Fund” Adamant Capital Provides Bitcoin Investment Strategies
Before naming a few strategies and explaining how they work, Lescrauwaet stated:
“Effective Bitcoin investment strategies depend on the maturity of the market,” adding that the initial “discovery phase” is over, and the “infrastructure phase” has begun.
Investors can decide which of these next three strategies to follow.
Don’t Lend Bitcoin
Lescrauwaet explains lending out Bitcoin for a year will get a return of nearly 2.5% in a bull market because the demand for bitcoin is small.
“Whereas in a bear market, when people want to go short, it’s about 6%, going by 2018 figures,” he said, adding that among the reasons why this is not a good trade are tax implications and counterparty risk.
Borrow USD With Bitcoin as Collateral
Deposit Bitcoin with a custodian and borrow USD with Bitcoin as collateral. Then, you can use the USD to buy more bitcoin. Lescrauwaet said this is a low risk-high return strategy used at Adamant. In addition, you can monitor returns every day.
Bitcoin Cycles Are Essential
If every investor knew when the bull/bear market cycles happen, they’d be very successful. However, this is data nobody has and it is also difficult to get. Adamant noted that the Bitcoin Relative Unrealized Profit/Loss is a handy tool to help you see the investors’ aggregate paper profits in the bitcoin markets.
Adamant’s data revealed that when profits hit 80%, the market tends to drop, Lescrauwaet concluding that “we are at around 40%, so there’s still room for upside.”
Here are other two strategies presented at Adamant’s presentation:
The last two strategies are investing in “Short high beta altcoins” and investing in “crypto hedge funds.”
As for Adamant’s position on Bitcoin, for now it is bullish, and earlier in September, cofounder Tuur Demeester stressed we are not in a bear market, but in a “post ICO-bubble bitcoin bull market.”