From Bitcoin maximalist to altcoin trader?

I have been a Bitcoin maximalist for a very long time, because I am convinced that Bitcoin is not only the first but also the best crypto token. Despite a lot of competition over the past decade it remained the safest, the most decentralized and the most valuable crypto token out there and I am reasonably sure that this will never change. When crypto will eventually replace the fiat financial system Bitcoin will be the store of value to keep your assets safe.

Because I think the fiat financial system is on its last legs and will eventually fail, I believe that the most important thing you can do for yourself and for your family, is to get as many Bitcoin as you can, while you still can. The window to buy affordable Bitcoin could be closing fast, with the upcoming spot ETF and the next mining reward halving in April 2024.

In the last bull market I saw many friends get very rich by trading altcoins, but it never held any appeal to me. Alts seemed like a casino and I did not believe that many altcoins would survive long term. However, after spending significant time studying crypto market structures during the bear market, I believe you can easily earn a lot more Bitcoin by taking early bull market positions in specific (large cap) altcoins and sell these for Bitcoin once the hype mania phase has started. If you do your homework you can also get in and out of small caps, but it gets pretty close to gambling and you should be willing to follow forums day and night in order to buy and sell at the right time.

I decided to try out a buy and hold strategy for large cap alts during the new bull market. I realise a lot of people will laugh at this and that’s fine. It’s simply a way to increase my Bitcoin stack without taking too much risk. I do not actively trade but I do a lot of research on a token and then deploy a relatively small amount of capital in it. After that I just wait 12-18 months before selling it. I started doing this in September and so far the results have been quite spectacular. I have only sold one of my positions and will likely not sell any others until I feel the altcoin hype phase has started, when I will start selling them for Bitcoin. I expect a 10X or more on some of my tokens and on average at least a 2X versus BTC. 

This post is NOT investment advice. These are purely my own ideas that I like to share with people and they may be completely wrong. During the time that we started Hut 8 Mining I have written about Emercoin, a token that looked great with a very good team. However, that token blew up and I actually lost all my tokens because the exchange I used pulled an exit scam. Lesson learned. No big deal for me, but I know some people followed me in that trade and lost money and that’s something that I don’t like to see. 

When I posted on Twitter about my altcoin strategy about a week ago some people approached me with questions about the tokens that I bought, so I decided to write a post about what I bought and why. Generally I don’t buy ICO’s or tokens that have recently been created. I look for tokens in the top 50 that have done well in the last bull run, that lost at least 95% since that top and have started to outperform Bitcoin since then. There are many tokens like that, so I only look for tokens that have a real story behind them and that have strong founders and a vibrant community. There is one exception to that rule, that I will explain at the end of this post.

Ethereum

First of all, I own a bit of ETH (of course). As the Digital Silver to Digital Gold (Bitcoin) it seemed like a good hedge, just in case something should happen to Bitcoin. The ETH community is vibrant and its leader (Vitalik) is a very smart guy. I bought a little bit of additional ETH earlier this year but I don’t plan to add any more. ETH is vital part of the crypto ecosystem and in the last bull market it has done very well. ETH may outperform BTC in the later stage of the bull market, especially if a ETH ETF should be launched (several applications have been filed already with the SEC). In the short run I expect it to perform similar to Bitcoin, but as it is also a hedge I will hold my position for a very long time to come. However, ETH has not done very well over the past couple of months, it only went up about 36% over the past 3 months. Some ETH maxis are not happy with it and don’t understand it. I think the reason may be that in some ways ETH is being surpassed by Solana, and investors are swapping ETH for SOL. A bit similar to what is happening with Gold: the Gold price is not moving much, likely because a lot of Gold investors now invest in BTC.

Solana

A couple of months ago I decided to get into Solana myself. I actually don’t remember what triggered that initial decision, most likely a podcast, but it was a very lucrative one. I had looked at SOL during the last bull market of course, but because I didn’t trade alts I never bought any tokens. That may have been lucky because SOL went from a top of $280 down to about $4. I got into SOL below $20 in September and added a bit more after the seeing the success of the Solana conference in Amsterdam in October. So far I made over 200% in 2 months, a lot more than I had expected.

I think SOL will completely outperform both BTC and ETH during this bull run, the chain is extremely well suited to run a huge number of financial transactions on it (especially once Firedancer will be launched next year) and the team behind it is very strong. Anatoly (the founder) is much more charismatic than Vitalik (ETH founder) and is able to articulate his vision for Solana very well. It’s early days but I can actually imagine that one day Solana could run the whole global financial system on its blockchain (on its base layer, so not an L2 solution), something that ETH could never accomplish. When I bought I had a price target in mind at which I will sell which is a huge multiple of the current price, but I may actually keep some tokens ‘forever’ because of the potential I see for Solana.

Filecoin

During Token2048 in Singapore Arthur Hayes talked about Filecoin on stage. His thesis was that decentralised storage will be the future, especially because AI will need it, and of all the tokens in the space Filecoin seemed the best. After his talk I spent an hour or 2 on research on these tokens, agreed that Filecoin seemed like the best choice for decentralised storage and saw that the token was starting to go up again. I bought in at about $3.20. The token did okay but I think it may not do as well as Solana, so I recently I sold my Filecoin around $4.60 (+40%) for Solana. 

Rune

Another token I found in September was Rune, the token that runs the Thorchain. If you want to swap Bitcoin for Ethereum without having to use a bridge (bridges do get hacked sometimes!) Thorchain is actually a good way of doing it. It’s not a direct swap, because the transaction will be to buy Rune for BTC and then sell Rune for ETH. Because of the team behind Thorchain and the interesting community, plus the fact that the token has real value, I decided to buy a number of Rune tokens as well. Also here I did surprisingly well (over 200% in 2-3 months). Rune is a long term token for me. I am not planning to sell it any time soon. I expect it to outperform BTC during this bull run and will eventually sell it for BTC once alt season really starts.

INJ

Sometimes I like to gamble a bit and that’s the case with INJ, a very fast blockchain for Web3 apps. It could do well, but I find it hard to judge on my own. A trader who I respect very much has a fairly large position in it and he posted a lot about it. I got a bit FOMOd by that and eventually bought a small number of tokens. Because the token did really well (also +200% over the past 2-3 months) I decided to buy some more. I have a short term target for this token, if it hits that I may sell half of it for BTC and keep the other half until alt season takes off. If it loses more than 50% I will sell and still have a nice profit.

Dogecoin (and Elon Musk)

The last token of which I own a bit is Dogecoin. I have never believed in this coin, it is a total joke that I believe was started as a fork of Bitcoin. I met the founders back in 2014 or 2015 and they literally laughed about what they had built. Because of that I never bought any of it at the time and decided to never buy any either (had I bought during that time I could have turned $1000 into $50 million and at the top of the last bull market even into $350 million). However, despite DOGE being a total sh*tcoin I still took a position in it recently.

\What happened is that I read the Elon Musk biography while doing a 5 day detox in a resort in Thailand. I had a lot of time to think about the book while there and one conclusion I came to was that Elon Musk is most likely going to turn Twitter into the largest financial institution in the world. He has been working on this idea for 25 years already. In the late 1990s he founded a company called x.com with the goal of making it into a global digital bank. Eventually he merged with PayPal but the PayPal team didn’t want to use the name x.com. It seems Elon took the domain with him over the past 2 decades and several of his companies (and his kids!) use the letter X in their names. I believe the reason he renamed Twitter to X.com is because he can now finally execute on his vision for a global digital financial platform, basically allowing any Twitter user to send money to other users or to invest/lend/borrow etc. through the platform.

Of course Elon will not use the traditional financial rails for this, this will be a blockchain play. Any reasonable person would probably use a Solana or a Bitcoin L2 solution for this, but Elon is different from a normal person. As you may remember Elon has on several occasions heavily promoted DOGE. At the time I thought that was really strange, because he is one of the smartest guys on the planet so he should see that it’s just a joke, right? Well, he probably does, but as it turns out he may also be the largest DOGE holder in the world. There are rumours that he owns literally billions of dollars worth of DOGE (although others say significantly less) and of course that makes things different. He has financially supported the DOGE developers and has even changed his Twitter picture to DOGE in the past. During a Saturday Night Live session that he hosted he kept on promoting DOGE, which sent the token sky high (before falling back to earth). There is no logical explanation for that, unless he indeed owns a huge number of DOGE.

If that’s the case what token do you think he would use for X.com? Right. If he would announce that X.com runs on DOGE it would send the price to the moon. It would not be a 10 or 20X but a much larger number. So large that it may potentially pay for his whole Twitter investment! When I realised this I immediately bought a small position in DOGE. I plan to keep it until Elon announces that he will change X.com into a decentralised financial system using DOGE as its base layer or until DOGE hits zero, whatever come first. Because DOGE is a memecoin I am totally prepared to lose this investment, but if my theory is correct it could be a very nice return.

Bullrun strategy

I am now fully invested and ready for the bull market to really take off. Bitcoin has done quite well (+60% over the past 2 months), but that seems to be mostly from existing users that add to their Bitcoin stack. There is not a lot of new money coming into the Bitcoin ecosystem yet, there is no hype yet and the man on the street doesn’t talk about Bitcoin like they did in 2021. Once retail start coming back in all bets are off, especially because most of the current BTC holders are simply not selling (70% of all coins have not traded over the past year, despite a 160% increase in price.

The only bet I am making is that some altcoins will outperform during the upcoming bull market (or right after BTC has reached its top), and I will sell them once they have beaten Bitcoin. High risk, potentially very high return. I will not do any short term trades, so I don’t need to constantly check the prices of these or other tokens. I will mostly look at BTC and check the alts once a week or so, although I set up an alarm system in case strange things should happen to the price of one of these tokens or if unexpected news comes out. I am looking forward to the new bull run, or in crypto-speak: to the moon!

Note: As mentioned in the post as well, this is not investment advice. You can very well lose all your money if you would copy these strategies.