In the ever-evolving landscape of cryptocurrency, it’s crucial to learn from past experiences and adapt your approach. After navigating two crypto cycles, we developed a comprehensive strategy for the third cycle, and in this article, I’ll share the details of our plan and how it differs from previous mistakes.
A Recap of the Past
We previously discussed our experience in the previous crypto cycles, spanning from 2017 to 2022 and marked by extreme volatility. The crypto market experienced astronomical highs and gut-wrenching lows. Unfortunately, by the end of our 2nd cycle (2022) we ended up with an 83% drawdown from the ATH which translated into a 66% loss on our initial investment.
At that time, we witnessed Celsius and FTX facing bankruptcy, alongside the downfall of the wonderboy of Crypto (Sam Bankman Fried), who had aligned himself with US Government Officials, Politicians, Hedge Funds, Investors, Celebrities, and the Elite of the USA, only to be ousted as a Fraud and Con-Man. In my view, this marked the lowest point in Crypto’s 13-year history and posed a severe test to my belief in whether there existed any meaningful purpose for Crypto beyond mere speculation.
However, upon careful assessment of the situation, I concluded that this wasn’t the end for crypto. I believed it would bounce back (a story for another article), viewing this as simply a low point in the Crypto cycle.
One constant in crypto cycles, is the recurring pattern where the floor of each cycle approaches the peak of the previous one. This pattern has held true for blue-chip cryptocurrencies, such as Bitcoin, Ether and Solana plus other top 10 cryptocurrencies. While skeptics continually label it a bubble, the consistent growth of Bitcoin’s (and other top 10 cryptos) all-time high (ATH) across cycles suggests otherwise; it’s evolving into a legitimate asset class.
Our Plan for Our 3rd Cycle
To capitalize on this potential, we’ve devised a structured 3 Phase Plan for the upcoming crypto cycle that extends across an estimated 2.5 years and not only returns our capital but aims to provide us with a 41% IRR per year since our original investment back in 2017.
At such point in time we plan to liquidate our crypto portfolio and re-assess options for the next Crypto Cycle.
Phase 1 – December 2022 to 2023: Recovering Capital Invested
In December 2022, we doubled down and make another significant invetsment in Crypto purchasing Ether. This phase aimed to recover our cumulative capital we had investment over the past 2 Crypto Cycles. By December 2023 (as we write this article) we had achieved this, ending the year with 10% return on total capital invested.
Phase 2 – June 2024 (Post BTC ETF Launch & Bitcoin Halving): 67% Gain on Capital Invested
With the proposed approval of a US Bitcoin ETF happening in early 2024 and the halving event in April 2024 on the horizon, we anticipate significant market activity. Our goal in this phase is to achieve a 67% gain on the capital we had invested by June 2024.
Phase 3 – June 2025 (Crypto Cycle Peak): 300%+ Gain on Capital Invested
One of the biggest mistakes we’ve made in past crypto cycles is believing that this is not a cycle but instead crypto will keep going up indefinitely. After two Crypto Cycles and reflecting on other assets such as Gold, NASDAQ, and Real Estate, our realization is that Crypto is similar to these and will go through cycles that over time will see it increase. With that said, we MUST have an exit strategy where we plan to liquidate the majority of our crypto to convert our paper profits into cash.
Through reviewing the previous three crypto cycles, we feel there are two scenarios that could indicate when the BTC price is likely to reach the peak of this existing cycle. We will opt for the scenario that plays out first. Our thoughts are that BTC will reach the cycle peak for which ever one of these scenarios happens first:
- Scenario 1 – 15 months after the Bitcoin halving (around July 2025)
- Scenario 2 – 336 days after Bitcoin breaches the BTC 2021 ATH price (USD68,789) for the last cycle.
If this plays out then it would almost be a 7.7 times return on the value of our portfolio in December 2022.
Outlined below is a timeline which maps out this plan and shows the growth on capital invested assuming our original investment after our 1st crypto cycle was $600.
Thoughts on 2024
Holding ETH
We believe that Ether will gain momentum in 2024, potentially outpacing BTC in terms of growth. This belief is especially strong after the potential approval of the BTC ETF, as the focus shifts towards an Ether ETF. If this ETF allows investors to receive staking yields on ETH, it will become highly attractive to institutional investors, likely resulting in a substantial influx of capital.
Below are a few other crypto’s we have explored which may slip into the portfolio through-out 2024.
Solana’s Ascendancy
Solana’s remarkable performance in 2023, coupled with its expanding market cap, positions it as a formidable contender for further growth in this cycle. As of December, it has surpassed XRP/Ripple to become the 5th largest cryptocurrency, and it’s poised to overtake BNB for the 4th position in just a matter of days. With only Tether, Ether, and Bitcoin ahead of it (considering Tether is a stablecoin), SOL is set to become the third-largest cryptocurrency. We anticipate a market cap ranging from $100 billion to $120 billion for SOL during this cycle.
Chainlink’s Catch-Up
Although Chainlink hasn’t experienced the same rapid growth as SOL and other layer-one blockchains in 2023, it has outperformed Ether. This phenomenon can be attributed to LINK’s existence since 2018 and its participation in its third cycle, making it less volatile than SOL. During the market downturn, SOL experienced more significant selling pressure than LINK. As of December, both SOL and LINK are trading at approximately 65% below their all-time highs. We anticipate that they will exhibit similar growth trajectories throughout 2024.
By sticking to this strategy and learning from past mistakes, we aim to transform previous losses into significant gains, ultimately achieving an impressive annualized rate of return (IRR) of 41% over a eight-year period. As we journey through the third crypto cycle, we remain focused on our plan, staying resilient in the face of market volatility, and committed to making the most of this exciting investment opportunity.
TheBucket 