An investment strategist shares his 80-20 strategy for buying stocks, leading crypto Bitcoin and leading altcoin Ethereum, and explains why a ‘crypto winter’ may come. Cryptocoin. For com readers, we have compiled the views of a strategist who grew up in the kitchen of this business.
“Follow the 80-20 strategy and avoid small altcoin projects”
As GameStop shares exploded and tokens like Dogecoin skyrocketed, a new generation of small-time investors became addicted to stocks and crypto. One of them is Danny Devan, an investing TikTok and YouTube influencer. But he’s not like many of his hope-seeking peers. Danny Devan doesn’t believe the fancy charts that claim every coin is headed to the moon. In fact, he says the market may be headed for an ugly bear winter, although most of his followers don’t want to hear about it:
They like to see price forecasts based on terms like inflation, supply chain, and the Fed. They just love seeing price targets, being told what’s coming, and seeing color charts, lines and charts. That’s why their followers are still attached to them. But what will eventually happen is that it will explode in their face.
Danny Devan focuses on the basics with an emphasis on fun in his videos. His style of making videos that are both educational and entertaining may not appeal to risk-hungry day traders. But she notes that it tends to be a hit among older social media users. The Strategist says, “The age range I have is usually in my mid to late 20s. We skipped the younger generation,” he comments.
Danny Devan says he relies on the 80-20 rule, a strategy that requires putting 80% of cash in relatively stable investments and 20% in higher-risk assets such as cryptocurrencies. He also recommends a 90-10 split as another option for more risk-averse investors.
The strategist says investors can approach the 80% side through broad-based exchange-traded funds that buy both growth and value stocks. Another variation is to put 40% on an ETF, 20% on growing stocks like tech giants like Amazon, Apple, Google and Microsoft, and 20% on stocks in economically sensitive industries like energy and finance.
Danny Devan emphasizes that investors should think carefully about how much volatility they are willing to deal with, especially when it comes to cryptocurrencies, and that those who choose to deal with cryptocurrencies should do so very carefully:
The key here is to not touch any other cryptocurrencies other than Bitcoin and Ethereum. Because at the end of the day, in five years, you know who will be there in the long run?” Most of these cryptocurrencies in the top 10 have disappeared if you look at the last few years. Bitcoin and Ethereum will continue to be here so you can invest in them.
Strategist reminds that even winning bets on highly volatile altcoin projects can lead to long-term losses. According to Danny Devan, if young investors score big on a smaller altcoin project that is skyrocketing in price, it may surprise them and desensitize them to the 7% to 10% gains that the stock market typically brings:
Your mind is only dependent on 10x increments, but that won’t always come.
Danny Devan: I wouldn’t be surprised if we enter a crypto winter soon
After nearly two years of enthusiasm, some analysts believe a cryptocurrency bubble has burst. Danny Devan says he is confident that the limited supply of Bitcoin and the smart contract platform of Ethereum make the two leading cryptos sound investments. But recent transactions show that some are having second thoughts. Tokens fell by 23% and 35% in 2022. Concerned crypto fans are asking the strategist whether this drop should be bought or avoided.
It’s tough because some say, ‘Hey, this is just a deep correction’ and some say, ‘No, it’s a bear market. In my opinion, we have entered a bear market. Because we have already passed the number of days that passed the halving that took place in the last few bull markets.
The halving represents a 50% reduction in the reward given to Bitcoin miners. A phenomenon that slows the supply growth of the digital token and theoretically makes it more valuable as it becomes scarce. Danny Devan says that historically, Bitcoin peaked about a year and a half after the halving.
Bitcoin’s last halving was in May 2020, meaning this one-and-a-half year mark would come in mid-November 2021. Of course, Bitcoin peaked at $69,000 in the middle of that month, and ironically, that price has been cut in half. The strategist states that this is a bearish sign for the world’s largest crypto, “not to mention the rest of the market”.
I mean right now we’re already down 15% or more and I think a lot of people are losing interest in crypto. So I wouldn’t be surprised if we enter a crypto winter soon.
But Danny Devan doesn’t think the sky is falling. He tells his followers that he has no way of predicting what’s coming, so keep calm and save up if they can digest the drops.
I emphasize to my group: Who cares if we go into a bear market, a bull market? Just buy some every day or every week. You will never get this.
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