Blockchain Investing: The Blockchain Believers Portfolio

Man looking out at the sun rising with his arms spread out in celebration.

The Blockchain Believers Portfolio is an easy-to-use template for investing in blockchain in a smart and sensible way. We designed it here at Bitcoin Market Journal in order to bring blockchain investing to everyone.

First, let’s review the principles behind smart blockchain investing:

  • Blockchain is a slice of the pie. Treat blockchain investments, like bitcoin and altcoins, as a part of your overall investment portfolio.
  • Blockchain is your “mad money.” Keep the majority of your investments in stocks and bonds, with a small percentage (between 2.5%-10%) in blockchain.
  • Stick to safety. Within your blockchain investments, stick to the top altcoins, or other investments that you have thoroughly researched. Avoid speculation on “small coins.”
  • Grow the pie. Contribute a small amount from your paycheck each month to your investments – preferably through direct deposit – even if it’s just $100.
  • See losses as lessons. As with all investing, don’t invest more than you’re willing to lose – and if you do lose, see it as “tuition paid” for valuable learning.

With those principles in mind, we’ve developed two copy-and-paste portfolios that you can use to guide your own investing.

The Baby Blockchain Believer portfolio is a more conservative approach (2.5% invested in bitcoin; the rest in stocks and bonds).

The Big Blockchain Believer portfolio is a more aggressive approach (10% invested between bitcoin, Ethereum, and Ripple; the rest in stocks and bonds).

We compare these with the Non Believer Portfolio, which is just invested in traditional stocks and bonds—no blockchain at all.

I lay out the Blockchain Believers Portfolios in much more detail in my book BLOCKCHAIN FOR EVERYONE. I show that the performance of these portfolios radically outperformed the stock market for the three years it took me to write the book (from 9/1/15 through 9/1/18).

But how would this strategy hold up over time? I couldn’t predict that when I finished the manuscript on 9/1/18.

So let’s see how things played out after the infamous “crypto winter” of 2018/19.

The stock market, measured by the Vanguard Total Stock Market Index Fund (VTSMX), has lost 5 percent since September 2018, partially as a result of a sharp correction in Q1/2020 due to the coronavirus crisis. The bond market, for which we use the Vanguard Total Bond Market Index Fund (VBMFX), has gained 10 percent in value during our theoretical investment horizon.

Blockchain investments had a mixed performance during the same time period. Bitcoin (BTC) is up by almost 23% while Ethereum (ETH) and Ripple (XRP) are down -29%, -38%, respectively.

But here is the power of the portfolio: unlike people who bet big on one coin and lost it all, our diversified approach keeps the losses manageable.

So far, it pays to be a believer. Both the Baby Believers Portfolio and the Big Believers Portfolio have outperformed the Non Believer Portfolio despite the harsh “crypto winter,” which saw digital asset prices plunge provided you would have actively added funds to your portfolio each month.

An Open-Source Portfolio

In the spirit of blockchain, we are open-sourcing this portfolio, so that anyone can use it for their own investments.

Moreover, the daily Bitcoin Market Journal newsletter is free to share, not hidden behind a subscription paywall. Our goal is to help investors hedge their risks while sharing in the rewards.

Education for everyone. Investing for everyone. Blockchain for everyone.

Subscribe to Bitcoin Market Journal today to receive daily blockchain investor updates by renowned analyst Mati Greenspan.

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