First Stage Investor

News on Cryptos and Our Portfolio

News on Cryptos and Our Portfolio
By Adam Sharp
Date February 1, 2018

As you have certainly noticed, the crypto market is experiencing a prolonged correction. I’m not surprised by this pullback, but it’s never exactly pleasant to watch prices dip.

In my experience, it is during times like these – when it feels like the market is destined to keep falling – that we should be out buying… or at least holding strong and resisting the urge to sell.

I’d also like to remind readers that a dollar cost averaging strategy is well-suited for times like these – buying the same amount of crypto multiple times for an extended time period.

And despite recent price action, there has been some great crypto news lately.

First, we got some good news on the regulatory front this week. According to Reuters, South Korea will not ban cryptocurrency exchanges. The rumor that the Korean government would ban trading put a damper on crypto markets. Here’s more from Reuters

South Korea’s finance minister said the government has no plans to shut down cryptocurrency trading, welcome news for investors worried that authorities might go as far as China’s tough action in blocking virtual coin platforms.

Second, Robinhood, the commission-free stock trading app, recently announced it would begin offering cryptocurrency trading to its millions of members. Much like its stock trading offering, crypto trading will also be commission-free.

This is huge news, and Robinhood already has a long waitlist for crypto trading (more than 1 million people signed up after only four days). The company will roll out this new offering in stages, and it is live only in a few U.S. states for now. Read more about the Robinhood news at TechCrunch.

This news should light a fire under Coinbase and other large exchanges, encouraging them to improve customer service and lower fees. It’s all-around great news for the crypto market.

I remain extremely bullish on crypto. Nothing has changed to alter our investment thesis. The current fiat monetary system is still faltering, and innovation in the crypto space is rocketing forward around the globe. And it still seems likely that we’ll see a significant influx of capital from large financial institutions this year.

That said, I’m considering a few changes to our portfolio. The crypto world is evolving, and the role of bitcoin may be somewhat diminished moving forward.

I still believe bitcoin will play a major role in crypto no matter what. It has the best security track record and the most developers, miners and nodes. With major upgrades such as the Lightning Network (LN) and Schnorr signatures moving forward, we will definitely remain long on bitcoin.

However, I am considering changes to our portfolio allocation percentages, and I am evaluating several potential additions to our First Stage Investor holdings. Much will depend on how successful bitcoin’s LN proves to be in the real world. It could dramatically cut transaction costs and increase speed. But LN is still in the testing phase, so for now, I’m watching and waiting.

Ethereum has been outperforming recently. Litecoin is holding on in a tough market and just announced some very positive news.

NEM (New Economy Movement) is experiencing a rather sharp correction due to a theft of NEM from an unlicensed exchange (Coincheck). This was a technical problem with the exchange, not NEM. Coincheck could have used NEM’s multisignature security measures, but it chose not to. NEM’s technology remains solid, and the NEM core team is assisting exchanges in identifying the stolen funds and attempting to prevent them from re-entering the market.

Despite the volatility, we’re still up significantly on all our positions. And the best thing to do during chaotic price action, in my experience, is to hold on and avoid making any rash decisions. I don’t recommend attempting to trade this market. Typically, holders consistently make money over time, while traders have a far more mixed record.

I will let members know immediately once any portfolio changes or additions are ready.

Sad Startup News

I have some not-so-good news to report in our startup portfolio. Geostellar, the solar company I recommended last year, has filed for bankruptcy.

This is our first recommendation to go bankrupt (as far as we know), and we’re obviously disappointed. But unfortunately, this is simply a part of startup investing. Some early-stage companies will fail.

In this case, I should have been more concerned about Geostellar’s high rate of cash burn. The company hoped another round of financing would come through shortly after the close of its crowdfunding round, but it never did. We will learn from the experience and move on.

If you invested in Geostellar, you should have received a notification from the team explaining the shutdown. Members who invested should be able to claim a tax write-off for the loss on next year’s tax returns. Please speak with a tax professional for more information on how to do this, as we cannot provide tax advice.

Good investing,


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