I believe that 2023 will be the year of accumulation. With many comparisons to the previous cycle and specifically 2019, it makes a lot of sense. One thing I am certain about is that we are much closer to the bottom than we are the top and that is why it feels right to share this article now.
I’m going to share five coins that I will be buying over the next 12–18 months and I’ll give some in-depth detail of my reasons for each. But before we get started, I want to make it clear that this isn’t going to be where 100% of my capital goes. Consider this a portfolio, within a portfolio. Stick around until the end and I’ll explain why in the conclusion.
1- Bitcoin (BTC)
A very predictable but essential start to this portfolio. Without going into unnecessary detail, Bitcoin remains the king of crypto and is going to stay this way for a while. Whilst Bitcoin is considered the ‘safe haven’ of the crypto world, it can still offer some very generous returns if you buy at the right time and your expectations are somewhat realistic.
Now as each cycle plays out, the industry matures and the total marketcap grows. As a result, the mind-blowing returns slow down (for BTC at least) and the multipliers start to diminish. Let’s take a look at some numbers:
2013 high = $1,240 > 2015 low = $162 (-87%)
2015 low = $162 > 2017 high = $19,800 (~120x)
2017 high = $19,800 > 2018 low = $3,150 (-84%)
2018 low = $3,150 > 2021 high = $69,000 (~22x)
Two key observations here:
A) as the market matures, the multipliers decrease. However, compared to traditional markets, this is still a favourable Risk Reward.
B) if BTC falls anywhere around the -85% mark, historically it’s a good buy. What price would that be in this cycle? $10,000. Which leads me into the buying strategy…
Firstly, catching the bottom is overrated, but that’s an article for another time. Averaging in is the answer when it comes to investing (trading is different) and I believe that averaging in between an 80%-90% drawdown is optimal regardless where the bottom may be. This would be $7,000-$14,000. Do I think the lower bids get hit? Unlikely, but they are there ‘just in case’. Being completely open minded, maybe none of the bids get hit! It’s important to plan for all scenario’s and in this case, I use technical analysis to understand when the macro downtrend is broken to prompt me to start buying on the way up.
Now let’s talk targets and multipliers again…
2013 high to 2017 high was ~18x
2017 high to 2021 high was a ~3.5x
See the pattern, again? Realistically during the next bull run, I believe that a fair estimation would be no more than a 2x of the 2021 high. I plan to scale out anywhere between $110,000-$130,000. You might think that is pessimistic and it is, for those who buy much later in the cycle. But in my eyes we have an opportunity for a ~10x on the ‘safest’ crypto asset there is, within a few years. Put your expectations into perspective here.
2- Ethereum (ETH)
It’s getting more predictable, right? Let me explain why Ethereum is probably my first choice when it comes to building this portfolio. For me and my risk tolerance, it’s a great blend when it comes to risk reward.
Some would argue that from a fundamental perspective it is equally, if not more valuable than Bitcoin. With an impressive average of 1million transactions per day and being the leading layer1 in the space, Ethereum is undoubtably here to stay and the opportunity presented to us during a bear market is well worth considering.
Now I won’t run the math like I did for Bitcoin (that can be your homework) but similar principles apply and I feel like Ethereum is destined for 5-figures during the next bull market. This would be little over a 2x from the previous ATH(all time high) and I think this is an achievable target due to the current marketcap only being $140billion compared to Bitcoin’s $315billion.
The strategy is simple. Buying ETH at 3-figures is optimal. Below $1k is worth averaging into, regardless of the specific figure. We ride the 4-figure train and then we jump off at 5-figures. For clarification, when I say 5-figures I’m talking $10,000, not $90,000.
3- Solana (SOL)
Now you’re probably thinking this is a strange one after everything that has happened with FTX? Risky? Sure, but with risk comes reward. After doing my own research and questioning the longevity of Solana due to Sam’s involvement, I made the realisation that the coin can continue to flourish without him. After all, his involvement is very much from a financial perspective and not a fundamental one.
“Bankman-Fried’s exchange and trading firm had purchased a total of 58,086,686 SOL tokens from the Foundation and sister entity Solana Labs from August 2020 onwards, the blog post said. The Foundation said it is unclear what will happen to those assets during bankruptcy proceedings.” — Coin Desk.
Despite this piece of news and the other coins within the SOL ecosystem that are tied to FTX, I think Solana has become a large enough project and platform to survive such problems. It may be that we see further short term pain, but this presents an opportunity for the investors who believe there is light at the end of the tunnel.
There are many question marks around Solana’s future and rightly so after the last few weeks. However, as I continue to do my research, I expect more information to come to light. As I accumulate throughout 2023, I will be honest enough to admit if I was wrong and flexible enough to jump ship if I have to. Otherwise I will continue to execute my plan.
So there is another question… Why not look at alternative layer 1’s?
The reason for this is because with the recent FUD around Solana, it opens doors for investors that other layer 1’s simply can’t. The potential on a return to previous highs from current price is a tasty 20x and that isn’t considering a breach of ATH in the next cycle. If we are given the opportunity to buy at a key level of support such as $8-$10, it makes for a great argument that we can secure a 40-50x with price rising to $400 in the next cycle.
I think another huge part of why I believe Solana can come out of the other side of this is because of my experience witnessing Ethereum in the previous cycle. Of course, it isn’t a perfect like for like scenario, but there was endless calls of how Ethereum was going to die and was destined for zero. I feel like this kind of fear, uncertainty and doubt in a bear market is a reflection of where the best opportunities can be.
4- ChainLink (LINK)
Some people may see ChainLink as an old, washed up coin but fundamentally, there aren’t many that are so important, specifically when it comes to smart contracts. LINK is an oracle and oracles provide off-chain data from a number of sources opposed to one centralised source and therefore, provide more accurate and reliable data. As the front runner and clear market leader within this sector, tied with a very supportive community, I think it is worth adding to the portfolio. Furthermore, there is another unique reason for the addition of LINK which isn’t related to the fundamentals…
ChainLink was considered a front runner last cycle. It’s most impressive rally was actually around the summer of 2020 whilst many other coins had either only just started or hadn’t yet built up much momentum. Many were left disappointed with LINK’s performance in 2021 but most bought late and hadn’t realise that it had already pulled a ~15x the year prior. My question is, could it do the same again next cycle and give an opportunity for us to rotate profits early in the bull market? And yes, we don’t hold, we hit our targets and rotate!
I personally see $3-$5 as a great opportunity to be buying, putting price at -90%/92% from its previous all time high. Again, this is another coin that would secure a 10–15x on investment even if it only reached it’s previous highs. With the expectations of price going somewhat higher than this, it remains an appealing buy despite being another large cap token.
5- Binance Coin (BNB)
I think that most would agree that BNB was always a solid pick but after the last few weeks, that argument has only got stronger. During the FTX fiasco, Binance shown not only great strength and power in the industry, but also good morales and a promise to do better, especially when it comes to transparency. Sometimes you back the jockey, sometimes you back the company. In this case, it feels like we can comfortably back both CZ and Binance.
Now there is an argument that BNB hasn’t dropped enough during the bear market. The discount isn’t good enough compared to many altcoins and I hear you, but there is a counter argument to this. Binance burn BNB tokens on a quarterly basis. Their aim to reduce the total supply from 200million to 100million. Of course this will take time, but it’s a positive as an investor to see supply decreasing whilst demand is increasing (in a bull market). In September 2021 the circulating supply of BNB was ~168million. It is now less than 160million in just over a year.
So despite BNB’s resilience during 2022 and ‘only’ dropping ~73% from top to bottom, I think that there is still a great opportunity here. Do I think BNB can offer a 50x during the next cycle? Not at all. Do I think BNB can act as a fundamentally solid option to provide balance against those that are considered more risky (SOL) whilst still offer a potential 5–10x? Absolutely.
Running the numbers
Before we get into this, I need to make it extremely clear that this is just myself sharing some thoughts on ‘what could be’ in terms of my own personal targets of entries and exits. Yes, some of these buys may not get filled. Yes, some of these exits may not get filled. Whilst it is extremely important to have a plan, if you stick to a rigid plan and be stubborn, you may miss them life changing opportunities. We have to be flexible and adapt to what the market is telling us.
Right now, I personally don’t feel that the bottom is in as you can tell from the average entries above. Although in relation to what I have shared earlier in this article, the entries and exits in the table below are based on my conservative side. This is just to paint a picture of what I have floating around in my brain. To reiterate, I will be flexible if I have to be!
Conclusion
Now after spending 8 minutes or so reading this, you might be thinking that it was extremely boring of me to select five coins that are in the top 20 based on marketcap. Well for one, you’re wrong because LINK is actually #21 at the time of writing and for two, this is my base portfolio. What I mean by this is that it isn’t where 100% of my capital will be going as I mentioned in the introduction. I will definitely be keeping a large chunk of change aside for low-mid caps but many of my purchases will be new coins that launch during 2023 and maybe 2024. One thing that I learned during the last cycle is that the new shiny coins often perform better than the older stuff, regardless of fundamentals.
Another thing to consider is playing the narratives. Whether it be layer 1’s, Metaverse tokens or even meme coins, I will be using capital to follow the money and capitalise on these opportunities. The portfolio above is my ‘play it safe’ portfolio which allows me to be comfortable whilst taking more risk elsewhere.
This for me is a portfolio that has a high chance of a 10–20x return within 3–5 years. It’s easy to be greedy in crypto due to the stories we hear but thats still an insane RR. I personally believe that it’s worth considering having a % of your capital allowance in a portfolio like this. It doesn’t have to be the exact same, but something similar to give you that comfort whilst taking higher risk elsewhere.
And of course, there are many other honourable mentions that I will probably will end up holding at some point for a certain amount of time, but they just don’t make the cut into this portfolio. ATOM and MATIC just to name a couple.
Hopefully this article was useful and gives you an insight into my thoughts before heading into the next bull market. We might have to be patient but talking from experience, it’s worth the wait. Just please make sure you have some kind of plan that is realistic and that you will actually stick to.
Last bonus tip — average, average, average! Move slow and don’t go all in at any one point.
This is my first article in a while but I will be writing regularly again. Please follow on Medium for more content but also on Twitter and Telegram where I will share when these articles are released.
Lastly, this article should not be considered as financial advice and has been written for educational purposes only.
