Monthly Crypto Portfolio Update (July 2020)

in #palnet4 years ago

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The economic rebound in conjunction with continued stimulus and monetary support being provided by governments and Central Banks has continued to add liquidity to many financial markets. Some of these funds are searching for increasing returns even if they have been associated with increased risks. This makes sense to me personally as it seems that even traditional financial markets like stocks and bonds are at valuations that seem closer to the risky spectrum considering their valuations. In fact, we have also started to see investors allocate more assets to hard assets like precious metals as Gold breaks new price records and Silver rebounds to multi-year highs as well!

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This liquidity and search for returns seems to have found its way into the Crypto Asset class as well as demand has seen increases in prices. Some prices has surpassed highs not seen since the 2018 Bull Market. While a portion of this demand is the fact that more institutions allocated funds to the asset class as more clarity comes from regulators (banks are now allowed to hold these wallets), a good portion of the demand has been due to the new phenomenom known as yield farming with the proliferation of the Decentralized Finance (DeFi) platforms that continue to innovate and develop. This has contributed to the Market Capitalization of the market to increase to $341 billion this month.

I believe that the latest number I saw is that over $6 billion have been staked for DeFi platforms. This has been led by increased adoption across many of the Blockchains that support the concept. However, it has also been due to more Blockchains themselves supporting DeFi as well. While Ethereum continues to be the leader, new Blockchains are looking to get a piece of the market given the potential and opportunities seen by platforms succeeding in providing great returns. This is also pushing Ethereum to develop and deploy their scaling solutions as the network has once again slowed due to the increase in activity. This recent push to DeFi has impacted bitcoin dominance as it has finally decreased from 64% although still strong at 61%.

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My approach continues to be the same as I continue to accumulate assets in the asset class over time. In fact, the more I see what is happening in the traditional financial markets and their institutions, I am convinced that Blockchain and DeFi will revolutionize finance and the markets in the coming years. While I have not aggressively shifted my allocation to the asset class, my overall asset base remains liquid to make moves quicker if the opportunities appear. While many have come and gone within the DeFi space, knowledge continues to be an important asset which I unfortunately have not been able to acquire.

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I have been interested in DeFi for months now but the limitations of my time has put a strain on my ability to research most of these initiatives. Despite having some great resources due to the many communities leading the innovation and development, I have not invested the time to research enough to get comfortable with allocated more assets to specific platforms. DAI continues to be my main source of exposure to the sector and into the asset class in general but not at a magnitude that would have allowed me to benefit from the recent moves in the markets we have seen.

My approach continues to be to remain exposed to the asset class at an increasing rate. I am happy that my Ether exposure grew while the markets were down last year so the latest surge has been great to experience and confirm the benefits of strategies like diversification and Dollar Cost Averaging. Seeing other assets other than bitcoin lead the markets is also encouraging as the potential to increased adoptions needs to come from others if the asset class is to succeed in the long term. I am encouraged with the future!

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