Fundamental Crypto Investments
When I initially got into crypto, everyone around me was in Shiba Inu & Dogecoin. After 15 minutes of due diligence, NOT including Musk & Cuban’s Twitter accounts, I knew those were not legitimate investments I was taught to make by the Buffet/Graham/Lynch style of analysis. I tried to utilize fundamental and qualitative analysis to the best of my ability in the crypto space. While tho gs have been turbulent, there are 10 or so projects I still feel comfortable accumulating and holding long-term. I always traded my crypto, not invested, so I’ve never been holding much for major crashes, have been extremely lucky to see some 20%-30% ROI months (not years), and avoiding the 3 catastrophic losses that have happened since I got involved.

Now that prices have crashed so low, to realistic levels, I feel confident buying for long-term positions. Buying Axie @ $185 early on was nuts, buying it for $15 today is also nuts, in reverse, as is usual behavior for investors. Too high, then too low. So I wanted to share a few clips of some of my favorite “real” projects to look at as legitimate investments (not theoretical, future problem solving projects; but real, revenue generating, active projects).

I’ve mentioned $CRO.X and $AXS.X , two of my favorite crypto investments and the only two I’ve added in the prior few months. Others I’ve started accumulating again at current prices are $AAVE.X , $MKR.X , $UNI.X , and $ETH.X 2.0 (1.0 been staked awaiting conversion). As Some of the crypto DeFi platforms failed, and filed bankruptcy, projects like Aave & Compound were paid before human creditors due to the execution of smart contracts; demonstrates the sustainability of the idea & use (if Ethereum BILLION # isn’t enough). Also have added two more speculative positions; $GALA.X a gaming ecosystem and $CHZ.X , a coin that represents voter/fan rights for sports organizations. Chilliz has already been working with European soccer organization‘s for a couple years and has deals signed and NFT collections created and sold with the NBA and the UFC. Very small market cap coin, still relatively unknown; fan is short for fanatic😉

Here’s a couple articles mentioning the revenue generated by some of the projects mentioned. I understand revenues in crypto space are not like revenues in the stock market. I have no claim to future earnings and cannot analyze these investments the same way. But if I am going to invest in crypto, I want to see real, tangible revenues and a management/developer team who meets their goals as laid out in the white paper and understands how to generate revenue with a Blockchain. I was sort of blown away that the simple lessons taught to me by Warren Buffett and Peter Lynch were so successful when analyzing & investing in crypto projects. The only thing is you really need to have confidence in your convictions. The crypto market is much more volatile and you really have to believe in what you’re investing in to be able to hold on for the ride. I am not a technology expert, so I cannot dive into some of these projects as they are still way too complicated. But ones I can see and use, that are growing and seeing adoption, I can feel much more confident in. Crypto is still less than 2% of my entire portfolio so it’s not like I’m taking any real risk here.

My analysis took me to these companies in the TTM, just wanted to find a couple articles with some numbers for you:


image

image

Here’s a link to entire Block.co article



image

image



Link to Motley Fool article



And links to the two speculative positions mentioned


Eric Messenger's avatar
Coinbase is literally the only exchange that I trust now, so I am very comfortable having Coinbase as the largest position (will be too 4 when a couple other catch up) in my portfolio. I’ve used a dozen wallets and exchanges, centralized and decentralized in the case of exchanges. Binance is crooked, Voyager filed bankruptcy, Crypto.com is my primary trading account/wallet combo, Kraken & Gemini are the only other exchanges I keep money now (outside Coinbase), both U.S. & more transparent that most exchanges. Just the fact that Coinbase is a public company & the SEC will demand more transparency than we have with any other exchange, makes me more comfortable in my position.

If anyone was going to start dabbling in crypto, I would take that advice. I don’t think it’s a coincidence that the U.S. exchanges are not filing bankruptcy, they are held to a different standard than some. I found exchanges & wallets who were domiciled in Malta, the Cayman Islands, and other tax havens where you’re not even able to invest without blocking your IP address so they can’t tell you’re in the states. People playing there were asking for trouble.

I don’t think crypto is nearly as risky as everyone seems to believe it is. As it is with Buffet disciples, I see risk as a lack of knowledge, not price volatility. So the volatility doesn’t scare me. As soon as I got in, I could see that this industry was dominated by traders and algorithms. The price swings are 30%-120% daily, for reputable projects. So I think the opportunity that exists for value & fundamentals focused investors is even larger in the crypto space than the stock market, if you can find the actual projects that are worth investing in. And if you believe that the market is a voting machine in the short term, and a weighing machine in the long term; it’s even more lopsided in the crypto Industry.

Again, this is most definitely the speculative part of my portfolio. I’m not a Blockchain professional or technology analyst. I’m just a guy with a brain that downloads all this and tries it. If it’s useful, adoptable, easy to use, has real world use case,& provides safety of capital/transparency (in the case of wallets & exchanges), then I think it’s a relatively safe bet to see adoption in the future.

I expected all the new traders to flake out of Robin Hood at the first crash, and that is exactly what happened. The same thing happened with E*TRADE & retail investors back in the day. I’m not sure why this was such a surprise. When a bunch of people jump in and start trading cryptocurrency‘s, options, and with margin; that is not going to end well🤣

Use your brain, both sides. This is an art, not a science. If it was a science, everybody with an algorithm would be winning.
Sidni Standard's avatar
Have you looked into $XRP.X? I think you may like it given your parameters. They’re making a lot of moves throughout the globe and partnering with a lot of governments to be the payment rail that SWIFT currently is. They move transactions at 3-5sec. Definitely something you should look into if you haven’t! They also have great management and have managed to attract some top ppl in finance to work for them.

One DeFi project I’m thinking of that failed pretty horribly is $TIME.X. I remember just a few months ago when it was all the rage to stake $TIME.X and now it’s worth almost nothing. Again falls in line with the thesis you’re following bc the major attraction was making a lot of money quickly, but it was clearly NOT sustainable. It was once worth $550 and is now worth $77 as of writing
Eric Messenger's avatar
@sidnistandard I’m familiar with them, they’re a global payment system right, that can be used easily across borders, I think? I avoid the “currency” sub-sector of crypto though. If it’s designed to be used as currency (Monero, ZCash, Litecoin, Bitcoin, Bitcoin Cash, XRP, etc.) then to me, it’s not an investment, it should be traded as forex is traded, based on factors I don’t understand, both macroeconomically & internationally. I don’t really have skills in that department. I look for the crypto projects that are generating revenues via a product or service, that I can analyze more like traditional businesses. Projects like VeChain and IoTeX that could revolutionize the Internet of Things, lending platforms like Aave, Maker, & Compound, exchanges like Uniswap & Sushi Swap, games/metaverse like Axie, Decentraland, Sandbox, Gala, etc., Web 3.0 projects like Filecoin & Fetch. Those are a few favorites. But they all have that “product/service” in common that already does, or can generate revenue.

I haven’t heard of the other you mentioned. Crazy, I thought I was familiar with most. Crazy how fast that industry changes.

Author

Related