Deciding when to take profits in crypto is extremely difficult. Based on past bull markets, we likely still have at least a year to go before things cool off (and probably more based on the unprecedented deficits and money printing today).
But I think it would be borderline irresponsible to not take some profits here. We’ve had quite a run in just about everything in our portfolio.
Of course — as I mentioned last week — everyone’s situation is unique. If you don’t want to take profits, don’t. But if you need the cash or can pay off some high interest debt… I say go for it.
Here’s what I recommend.
- Sell 1/5th of bitcoin position: I suspect the BTC run still has a long ways to go. Institutions are just getting started buying, and the next decade should be the perfect environment for this alternative store of value. But we’re up 771% and the future is unknown. For many of you selling just a fifth of the position will more than pay for the original investment — and allow you to “play with house money” from here on out.
- Sell 1/2 Decred (DCR): Decred is up from around $20 a year ago to $134 today (many of you bought in for $77). Those who reinvested dividends have done very well on this one. Let’s take some profits on this huge run-up, and let the rest ride. I still like this project, but let’s be prudent and take some long-term gains.
- Continue to hold Haven Protocol (XHV): We’re up 495% on this project, but it’s still tiny, and is a hot name. Let’s continue to hold here for the potential homerun.
- Sell 1/2 Nano (NANO): We’re still down 40% from where we bought in 2017, but it’s bounced back significantly over the past year.
- Sell all OMG Network (OMG): This is disappointing, as the project never really met its potential. But it’s up from about $1 a year ago to $6.50 today. That means we’re only down 17% on this investment. But I no longer have faith in this project — let’s get rid of it.
- Sell High Performance Blockchain (HPB) if you still hold it. Another disappointing pick from our highly speculative portfolio. If you kept sizing small as recommended, it shouldn’t affect overall portfolio performance much.
These are just my recommendations. Do what you feel is right for your situation. But if you have a large portion of your portfolio in crypto and will need the money in the next few years… I do recommend taking some profits.
Where To Put The Profits?
Now the big question… where to put the profits? I’m hesitant to recommend new altcoin names at these highly elevated prices. Everything is soaring. There’s probably short-term trading gains to be made, but I haven’t found anything worth owning for the long-term yet. I will continue to look.
In the meantime, why not diversify your portfolio a bit with some gold and silver investments? I love owning physical metals and mining stocks. I think mining stocks are particularly attractive here. They should serve as an excellent inflation hedge for many years to come. Two ETFs I like are SGDJ and GDX. SGDJ is a junior miner (small cap) fund run by Sprott which I believe is the best way to own juniors. GDX is a large-cap diversified miner fund.
I also love emerging markets stocks here, which are still remarkably cheaper than U.S. ones. VWO, RSX, RSXJ, EYLD and EWZ are a few names to consider.