Monday, December 11, 2023

The $10,000 paper trade investment challenge- Where I would invest $10 grand right now


Mark Yusko, founder of Morgan Creek Capital, is a longtime Bitcoin and crypto enthusiast, and a venture capitalist, looking to invest in the top emerging technologies and businesses today.  In this clip from June, he's answering questions about the BlackRock Bitcoin ETF application, and crypto and Web 3 in general.  He's a really knowledgeable person on crypto, finance, and emerging technologies in the WEB 3 world.  Mike Ippolito of Blockworks Macro does a podcast every Saturday morning with Mark, which I recommend if you're interested in crypto.  Here's their last On the Margin podcast from this past Saturday. 


In this CNBC news segment above, from June 22, 2023, they speak about the fact that global finance behemoth, BlackRock, had just applied to create a Bitcoin spot price ETF (exchange traded fund).  BlackRock has more recently also applied for an Ethereum spot price ETF, as well.  What would crypto ETF's do?  They would allow large, institutional investors, the people who manage trillions of dollars of global investment funds, to get exposure to Bitcoin and Ethereum, without actually buying crypto itself.  The ETF's would allow investors to make or lose money as Bitcoin and Ethereum go up and down in price, and also be able to trade the ETF's as easy as they can trade stocks. Major funds have rules as to what they're allowed to invest in, and all crypto, even Bitcoin, is definitely not on the list.  

If  BlackRock, or others, are allowed to open up these ETF's, it will undoubtedly draw many tens of billions of dollars into the crypto sphere, raising the importance, and value, of Bitcoin, Ethereum, and crypto,  in the traditional finance world, in general.  In short, the general belief is that this will be another factor driving up the price of Bitcoin, and other major cryptos tend to rise as Bitcoin rises in price, at least for a while.  BlackRock has started hundreds of ETF's, and only had one turned down.  So the expectation is that their Bitcoin ETF, and perhaps some other ETF's proposed by other companies, will get the official approval as soon as January 8, 2024.   If the ETF is not approved in January,  the next potential approval date is around March 12-14, 2024.  

In addition, the next Bitcoin halving, something that happens to Bitcoin every four years, is due in April of 2024.  These are two major reasons, in addition to increased overall adoption of Bitcoin, Ethereum, and other cryptos worldwide, why the next big crypto bull market cycle seems to have begun.  Bitcoin was at $29,913 per Bitcoin at the time of this news segment above,  June 22, 2023.  Today, December 11, 2023, it's at $41,935.  Bitcoin is up over 153% since the low in December of 2022.  By comparison, the S&P 500 stock index is up 21.8%  since its December 2022 low.  

Yesterday, getting sick of missing out the opportunities I've been watching happen in crypto, I tried to sign up for a crypto account.  But I wasn't able to fully open it, I don't completely meet the criteria.  I make very little money, but even getting $30 or $40 every once in a while into a crypto coin with potential would be cool.  So today I'm really fucking pissed off that I can't get an account so I can at least buy a tiny bit of crypto and teak advantage of what looks like a generational opportunity.  

Lying half awake this morning, still pretty pissed, I realized that I could do a blog post, and "paper trade" the cryptos that seem most interesting to me, while I try to get the account issues worked out.  For anyone who isn't familiar with the term, "paper trading" is just pretending to trade something, like stocks, commodities, or crypto. You write is down on paper (or maybe a phone or tablet, these days), and follow the pretend trades, to see how they would work out.  Basically, it's practice trading, you write down, "Today I "bought" this amount of Bitcoin at this price," for example.  Then, you watch how it plays out, and say, "On this date, I" sold" my Bitcoin for this much."  It's a free way to learn about markets and trading dynamics, test out your knowledge and strategies, without losing money.  Again, this post is paper trading, an intellectual exercise to test my ideas (since I can't get a crypto account at the moment, and don't have $10K anyways).  This should not be taken as financial advice.  This exercise and blog post are for entertainment and educational purposes only, check out the Disclaimer linked above for more details. 

So here's my starting point question.  
Where would I invest $10,000 right now, if I had it to invest?

Here's my picks, all crypto, figuring a 5% fee to make each trade, on the morning of December 11, 2023.

$1,000 into Bitcoin-  @ $41,678 - that would be .02399 BTC
                                         $50 transaction fee.
$1,000 into Ethereum- @ $2,213 - that would be  .4518 ETH
                                          $50 transaction fee
$2,000 into Apecoin- @ $1.62 - that would be 1,234.56 APE
                                           $100 transaction fee
$2,000 into Avalanche- @ $35.13 - that would be 56.931 AVAX
                                            $100 transaction fee
$1,000 into Solana- @ $69.65 - that would be 14.357 SOL
                                             $50 transaction fee
$1,000 into ThorChain- @ $5.80 - that would be 172.413 RUNE
                                              $50 transaction fee
$500 into Polkadot- @ $6.67 - that would be 74.962 DOT
                                               $25 transaction fee
$500 into Polygon- @ $.84 - that would be 595.238 MATIC
                                               $25 transaction fee
$250 into The Sandbox- @ $.51 - that would be 490.196 SAND
                                               $12.50 transaction fee
$250 into Decentraland- @ $.49 - that would be 510.204 MANA
                                                $12.50 transaction fee

That's where I would invest $10,000 right now, if I had ten grand, and a crypto account.  According to Google, fees on the Coinbase crypto exchange range from .05% to 4.5%, so I rounded up to an even 5%, over that amount slightly, to make it easier to figure.  

If I had $10,000 right now, I WOULD NOT put money into stocks, gold, silver, or real estate.  OK, you couldn't buy much real estate for $10K, but I think it's got a ways to drop anyhow.  Late 2024 or more likely 2025 will be the time to look for deals in residential real estate.  I think stocks are running out of steam, as the global recession/depression that's building takes hold, and consumers in the U.S., and worldwide, run out of money.  So I expect stocks to head down into a bear market soon.  Gold just had a drop, then a good run, and now is hovering around $2,000 per ounce.  But I think it's done for a while, as is silver, as we head into several months of disinflation or actual deflation, in early 2024.  Crypto is the game in the investing world, as I see it, for the next 6 months to a year, and probably 18 to maybe 24 months.  

Crypto dropped, overall, last night, most coins by a few percent.  That was pissing me off even more, since I couldn't get the account to fully activate.  They were backing off in a little correction due to some news from some senators trying to put a lid on crypto.  

These crypto picks are not me swinging for the bleachers, hoping for 50X or 100X, homerun shots.  I think Bitcoin and Eth will trend solidly upward, overall, for the next year or more, but won't go nuts.  Maybe 1X to 3X each in 12 to 18 months.  Maybe.  This would almost certainly be a better return than nearly other investments, but not huge growth for the crypto world.  

Solana, Avalanche, and THORChain have been on a tear recently, but since we are so early in this bull market, I think they have room to run.  These would be the ones I'd look to first to take some profits, if they keep soaring for a while.  In this paper trading experiment, if I decide to "take profits" from any of these trades, that's when I might put money into more risky coins, just like I'd do if actually trading for real money.  

Apecoin is the crypto for the Yuga Labs, the Otherside/Bored Ape Yacht Club metaverse.  When I first heard about NFT's, and started learning about them in 2021, the Bored Apes were my favorites, by far.  I loved the art and those weird ape characters.  As I learned more about the team at Yuga Labs, I really liked what I saw.  The whole Bored Ape/Otherside game metaverse has been largely forgotten now, but I think they'll be back at some point, and Apecoin will pump up some.  They are hardcore gamers at heart, and Otherside is a game metaverse that people can own pieces of, and explore like MMORP games.  I think they'll be back in the news at some point in 2024 and then Apecoin will pop up 

Polkadot and Polygon are two of the major cryptos from the last cycle, and I don't think these have seen  the potential gains of this cycle.  They seem like solid bets for some growth, as I research more obscure cryptos and see what's farther down the list, with higher potential for major growth.  These would be two more I'd look at to take some profits if they go on a good run, and then invest those profits in more speculative coins.  

The Sandbox and Decentraland are the two other main metaverses that have been left for dead by investors.  These are moonshots, but their coins are super cheap, and something, virtual environments that can be explored and interacted with, actually exist.  That's more than you can say for most cryptos.  I think there's a chance we may see some renewed interest in these metaverses as things pick up, NFT's get cool again, and crypto prices get ridiculous, sometime next year.  I could be totally wrong.  We'll see.  

So those are my picks for where I would invest $10,000, right now, on December 11, 2023.  I'll do a monthly look at these picks, and maybe post more often on this paper trade experiment, if I decide to make some changes.  Again, this is a "paper trade" exercise to see how my picks would play out, since I don't have any real money to invest, and can't even get a crypto account at the moment.  I do not own any of these cryptos (except that I had $5-$10 in BTC and Eth in my old account, that I can't access anymore).  If you have any comments or thoughts, let me know on Facebook, or Twitter (still not calling it X).    

As I laid there early this morning, thinking about crypto and life in general, I decided the tiny amounts of money I make would be better spent right now by doing some writing project ideas I've had.  My art sales have faded dramatically over the last few months.  I think there's more potential to make a living again in writing, and I'll work on some of those ideas, working in that direction, over the winter.  I'll watch this crypto paper investment project, and see how things play out, and maybe I can jump into crypto before this next bull cycle winds down.  

Other investments today, as a reference to see how crypto performs in the future, by comparison:

Precious metals-

Gold- $1,982 per troy ounce
Silver- $22.82 per troy ounce
Platinum- $914 per troy ounce
Palladium- $962 per troy ounce

(spot prices from Gold-Eagle.com)

Stock indices today

Dow Jones Industrial Average- 36,404
Nasdaq 100- 14,432
S&P 500- 4,622
Russell 2000- 1,833
 (closing prices today- 12/11/2023)

The Magnificent 7 Stocks (the real growth in the stock market in 2023)

Nvidia- $466.27
Alphabet (Google)- $133.29
Amazon- $145.89
Apple- $193.18
Meta Platforms (Facebook)- $325.28
Microsoft- $371.30
Tesla- $239.74

(closing prices today- 12/11/2023)

 
Prices, and percentage that The Magnificent 7 stocks are up since Cramer told people not to buy them last year, on December 28, 2022, (just under a year ago).

Nvidia- $140.36  Up 232%
Alphabet (Google)- $86.02  Up 55%
Amazon- $81.82  Up 78%
Apple- $126.04  Up 53%
Meta Platforms (Facebook)- $115.62  Up 181%
Microsoft- $234.53  Up 58%
Tesla- $112.71  Up 113%

Bitcoin is up 153% over the same time period.  The difference is that Bitcoin will most likely go up more than 100% in the next year, and those stocks definitely won't.





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