Timing the market is a fool’s errand. I’ve written and said that sentence often enough that if there’s ever a Comedy Central roast for me (not going to happen, but still fun to dream about), it will be used to make fun of me mercilessly.
But it’s true. Timing the crypto market is almost impossible. It’s so volatile that the only thing you can do is make the best decision you can — and mitigate any downside through dollar cost averaging (buying a small fixed amount each week until you’ve purchased your entire position). That way if the price of the coin you’re investing in falls, you reduce your effective purchase price.
But sometimes you get lucky and catch a good investment opportunity right after a big drop in price. I believe that could be the case today.
Radicle is a project I’ve been keeping an eye on. It’s essentially a decentralized GitHub. It allows software developers to collaborate to create and update software without there being a central repository like GitHub has. Radicle even uses Git, the same protocol GitHub uses.
Three of the smartest people in crypto — Meltem Demirors, Naval Ravikant and Balaji Srinivasan — have invested in the project. And I believe that Radicle — or something like it — is the future of software development and will eventually dominate the blockchain space.
Radicle is run by a decentralized autonomous organization (DAO). And RAD, the coin you would be investing in, is the governance token for the DAO. Investing in a governance token is different from investing in other forms of crypto. Owning governance tokens generally gives investors some sort of influence over the direction of the DAO. But that’s not where investors gain returns. With governance tokens, the overall health of the project and a relatively drama-free governance process drive the value of the coin.
To that end, Radicle completed a major upgrade in April called Heartwood to improve usability and performance. Completing a technical project like that is a good sign the project is headed in the right direction.
In terms of price, we might be catching Radicle at a good time. Consider the following charts showing Radicle’s performance.
Seven-Day Performance
One-Month Performance
One-Year Performance
After trading sideways following the Heartwood upgrade, Radicle took off when the calendar flipped to May. It jumped from around $2.21 on May 1 to about $6.13 on May 5. It’s now trading at around $2.47.
And that’s why we may have gotten a little lucky from a timing perspective. Buying in at $2.47 is far preferable to buying in at anything over $2.60.
Radicle’s all-time high is $27.35. That happened in April 2021. The $6.13 mark it hit earlier this month is the highest it’s traded in just over a year.
During the last 12 months, Radicle spent a fair amount of time trading below $2. It could enter that territory again. That’s why dollar cost averaging into your position is an absolute must. But during the next bull market, Radicle topping $3 seems likely — and topping $5 is definitely a reasonable possibility. Those are solid returns.
We’re adding Radicle to the Crypto Asset Strategies speculative portfolio. It’s a highly volatile coin associated with a project that’s still trying to gain traction. But it’s a good project. And the price is right. Buying in before it hopefully takes off again in the next bull market feels like the right play.
Rules of the Road
This is a tricky market to invest in. But it’s important to be opportunistic. So if you have capital to invest — and you’re psychologically and emotionally willing to enter what promises to be a highly volatile market — here are some guidelines to follow.
- Do not invest money you can’t afford to lose. If you can’t afford to lose the money, don’t risk it.
- Focus on projects with strong use cases.
- Look for teams or communities that are active and committed to their projects.
- Always enter a position using dollar cost averaging. That means buying a small amount each week rather than buying your entire position at once. That way, if prices fall, you lower your overall acquisition cost.
- Don’t try to time the market perfectly. Nobody can. So if you want to wait, that’s perfectly okay. But when you do invest, make sure you utilize dollar cost averaging to buy into the market.
- Diversify your crypto portfolio. From a percentage standpoint, bitcoin and ethereum should be the biggest investments in your crypto portfolio. But you need exposure to a much broader and more diverse set of coins to take advantage of the full upside of the crypto markets.
Remember, investing in crypto is risky. Less than 5% of your overall portfolio should be invested in crypto. That said, I believe Radicle provides an attractive risk-reward ratio.
Radicle can be acquired on both Coinbase and Kraken.