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While trying to explain how the crypto cycle gets determined, Nam Sardar has to state that minor and major cycles exist. Minor cycles happen every 6 to 9 months. Major crypto cycles take place every 4 years, which will start just a few months after the Bitcoin halving event. So investors need to have a clear understanding of minor cycles.
There is a commonly used terminology known as the Altseason. When 75% of the Top 50 coins perform better than Bitcoin over the past 90 days, it is known as the altcoin season. When Bitcoin outperforms 75% of the Top 50 coins for the past 90 days, it is known as the ‘Bitcoin season.’
Every cycle represents several months of accumulation, which will be followed by a few weeks of prices peaks. And this gets further rinsed and repeated.
My general strategy has been to allocate a part of my capital to my “safe” coin/s, and the remaining amount to faster-growth coins.
Nam Sardar Gives Two examples: “A buys Cardano ($ADA) worth $10,000 in Aug 2020 (at $0.125). B buys BTC worth $10,000 at $11,733 at the same time. So the $10k allows Investor A to buy 79.8k tokens of ADA and Investor B 0.85 BTC.”
A year later, ADA’s price is $2.02, while BTC’s price is $45,347, and Investor A sells. A’s 1Y return is 16.12x or 1612% for ADA and 3.86x or 386% for BTC. Investor A has $161,193 for the $10,000 initial investment, while Investor B has $38,649.
Investor A now converts his ADA to BTC and gets 3.55 BTC, while Investor B, the BTC-only investor, still has his 1:1 BTC meaning, he just has his original 0.85 BTC.
Here’s what it looks like if the ADA investor had staked his coins as soon as he purchased them, and his return with a 5% staking yield. He effectively has 3.73 BTC at the end of the year, while the BTC-only investor still has his 0.85 BTC only.
BTC can also earn a yield on platforms like BlockFi etc. However, the coins should be deposited in 3rd party apps, and this means you don’t hold your own keys when earning yield on BTC through 3rd party platforms, and that is indeed a huge risk. Not your keys, not your coins.
The ADA staking in this example happens directly from a Trezor wallet, where you hold your own keys. For example, you could use Yoroi Wallet, linked to Trezor, or use a hot wallet staking app like Atomic Wallet.
With more and more people discovering the staking and yield-farming capabilities of DeFi, the price appreciation of DeFi tokens will be something to watch for.
