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If you have been following the Bitcoin price ticker or you’re a crypto enthusiast actively following the price movements, the stock charts might seem pretty boring to you for the past several weeks/months now.
But, don’t worry. I am on the same boat as you here. In fact, we are one amongst the millions across the globe waiting for the Bitcoin price to move up north so that we can all make some decent profits! Staying flat is boring and over time it can really get frustrating! And Bitcoin’s price is showing no signs of recovery, at least for the moment 🙁 which is sad.
While Bitcoin’s price action seems to be going nowhere and with Binance banned in Ontario, things seem to be going downhill, or is it for the cryptocurrencies overall?
While Binance is one of the largest crypto exchanges in the world by sheer trade volume, it’s really sad that they are leaving Ontario with such short notice. But, the question is did you even expect the shutdown in the first place? I’m pretty sure you’re answer is a “No” here.
Do remember one thing though, these things were meant to happen, you might even hear more news like these in the near future too with tighter regulations in place.
The TikToker’s are happily making money and views asking you to dollar cost average (DCA) and still keep buying the Bitcoin or Ethereum, but should you? Will the Bitcoin price fade away like how Binance just did or does it even have a future. How long do you need to wait for the BTC price to be back to $60K USD levels which we witnessed in the early part of 2021?
Remember, the central banks are coming up with digital currencies as well and Bitcoin mining is bad from the environmental standpoint (at least that’s what the media says :P)
Anyways, moving on!
So, you tell me what do you want to do? Buy and hold BTC for the next 10 years to be that millionaire who bought BTC at $10 or Invest in good quality stocks and ETFs which are here to stay for the long term with strong fundamentals? You tell me.
Or is it better to buy a fraction Into the crypto alias Bitcoin/Eth/ADA/VET and another portion into stocks? What’ll be the right and the best approach we can all follow so that our portfolios are well diversified, minimizing the max drawdown in the case and maximizing the gains on the invested money.
Which approach can give me the most gains? 70 – 30 (Crypto- stocks) or 50-50 or 30-70 or 100-0%?
Let’s begin.
Bitcoin – What I personally feel (Like seriously)
Look, don’t get me wrong, I do feel that Bitcoin’s here to stay for a long haul. I’m just honest here. I truly believe with the fundamentals of BTC, it is here to stay and the price will move up eventually.
In case you are wondering why just take a look at the BTC price chart. Mind you, Don’t just look at the 6 months or 1-year price charts, that’s plain stupid unless you want to trade for the short term.
Rather look at the 5 yr or the max term price charts for the BTC-USD pair or BTC-CAD pair. that’s when you’ll notice that, for a real long time, Bitcoin’s trading sideways until the big push which started early last year. The rally to almost 65K USD. If you want to make massive profits from any of the investments you make, you got to stay for the long term.
By long term, I mean staying invested by dollar-cost averaging for 5 years at least. By doing so, you’ll invest when the price is high and low, averaging your purchase and make excellent gains as the price starts moving up. Shakeypay has this excellent feature where you can buy BTC on a recurring basis for a low monthly or bi-weekly amount. Just set it once and forget it for some time.
You can compare the BTC price push (from 4K to 65K almost in 18 months) to stocks as well, for example, consider the case of Apple and Tesla Stocks, did you see the wild price movement last year?
I am talking about the times when Apple and Tesla announced the stock splits and almost every trading day the stocks were green by a huge percentage basis. It was like FREE money being thrown away. You could just pump in some money (in the morning) into the stock markets and get out in the afternoon making a certain percentage.
Fast forward to today, the stocks are all boring, with no nitro boosters! (though Apple’s been steadily climbing up to $140s from $120 around where the stock was massively stuck with low’s of $105 after the split (Apple’s already at $140 USD levels, slowly picking up the steam from $120s after trading sideways for quite a while).
Look, the point here is, Apple (can’t include Tesla here) is a large-cap blue-chip stock right, you can’t expect the price movement to be like a rocket ship, it tends to move sideways and then breakout, so by dollar-cost averaging Apple any day is an excellent investment choice. I would recommend investing in Apple any day of my life. It’s plain fundamentals and FCF (free cash flow) for me.
Forget Apple, every miner stock out there, be it the US or Canadian mining stocks – MARA, RIOT, HIVE, BIitfarms, etc., all of the miner stocks had 1000%+ returns during the Bitcoin bull run recently. Now almost every miner stock has tanked since then.
You cannot definitely buy the dips here, coz it makes zero sense. Investing in BTC right now makes sense, to be honest, and not the miner stocks. Miner stocks are just a proxy for the actual Bitcoin price movement with no value to add.
Then, the question remains, is Bitcoin moving sideways then?
Yes for sure, right now Bitcoin seems to be again in the consolidation range, like how it was before the run-up (I mean to say prior to the huge run-up for the past 18 months or so). So the best approach will be to accumulate and dollar cost average before the next price move. Coz once it starts moving it’ll be pretty fast again.
As is, if you look at the stock-to-flow chart for Bitcoin, you’ll definitely see that the current Bitcoin price is way below the model. And the best part of following the stock-to-flow model is that Bitcoin’s price has always been following the model trajectory. Also, there is no apparent reason not to trust the stock to flow model, right? It’s proven time over again.
So what should your approach be, should you be investing only in Bitcoin or how can you allocate your portfolio so that you don’t expose your entire money saved into crypto?
What if the Bitcoin price never recovers? I mean like even after 100 years BTC price doesn’t rise up from the current levels (stays flat at $32K), that’s where the portfolio diversification comes into play.
In fact, it’s not only BTC, any equity or crypto that you overexpose can be problematic. So do not put all your eggs in one basket 🙂 You got to invest only a small portion of your money into BTC or all of the cryptos combined and the rest into stocks, equities.
The Right Approach To Investing In Bitcoin That I’ll Follow
Alright then, enough said and done. Let’s now talk about the right investment approach to invest your hard-earned money so that you don’t end up losing even if the markets tumble and fall.
Let’s consider an example here to help you understand better and what I mean to say, exactly.
Consider that you have $100 to invest every month, how would you do that. If I were you, this is how I’ll be investing that money:
$10 – Crypto – Again you can segregate $10 into $3 BTC, $3 ETH, $2 may be ADA (Cardano), $1 XRP, $1 VET (just examples, choice of crypto is yours)
Next $40 – Stocks (equities – blue chips) – Buy stocks of Apple, Microsoft, Amazon, Google, Tesla (buy fewer units here compared to others)
Next $40 -Stocks again with good dividend yield, especially Canadian Bank stocks – TD Bank, Enbridge (my personal favorite), RBC, BMO, CIBC, etc.
The last $10 – Buy some quality ETFs – VFV (S&P 500), XUS, XRE, VUS, etc.
Now that was just an example and not a piece of financial advice in any sense.
However, the above portfolio breakdown should give you a pretty good idea on how to expose yourself to all the sectorial investments (crypto, stocks..) and not overexposing into one single stock or crypto but instead weighing more on the good quality market-proven blue chips, while earning some dividends and capital growth with a mix of US and Canadian stocks to get the best of both worlds. By doing so, you’re no bound to doom when the markets fall and crash, you’re still doing good portfolio-wise with a small dent probably, which will recover pretty soon.
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Sagar Sridhar is an accomplished personal finance blogger hailing from Canada. With a unique blend of quirkiness and enthusiasm, he has established himself as a prominent figure in the personal finance industry. Sagar’s passion for finance, coupled with his engaging writing style, sets him apart from his peers. While he has a background in computer engineering and a Master’s in Project Management, Sagar’s true passion lies in helping others manage their money. His writing has been featured in several top Canadian finance publications, solidifying his status as a sought-after voice in the field. Despite juggling his work and blogging schedule, Sagar remains resolute in his mission to make a lasting impact on the personal finance world.