It’s an open secret: the main way to beat the “smart money” is to avoid holding cryptos while the winter persists.
In our case, the smart money is represented by three of the largest and most widely recognized crypto investment funds in the world: a16z, Binance Labs, and Coinbase Ventures.
Here is how our portfolios–which don’t just buy and hold cryptos–and theirs stack up over this year.
You can see how none of the smart money portfolios are beating the benchmark (BTC). It might be a little hard to conceptualize what’s going on with the numbers, so here’s an alternative presentation of most (not all) of that data.
As you can see, a16z, the darling of the crypto investing world, isn’t doing that well. In fact, just buying and holding Ethereum would have saved you more money.
Let’s look at two of the specific strategies we’ve been using to beat the benchmark (BTC) and all of the smart money.
The first is the crypto maxi strategy. We explain the logic of this strategy as lesson 16 from The Art of the Bubble. This first image depicts how the crypto maxi strategy has performed starting with the 2018 crash (strategy in yellow).
And here is how the crypto maxi strategy has performed year to date (in yellow) vs BTC (the benchmark, in white)..
What’s interesting about this strategy is that it always holds cryptos. It never cycles out to hold stable coins. Even still, it’s massively outperforming BTC in this environment and all the smart money.
Our next strategy is the crash cost averaging strategy–first explained as part of the Absolute Beginner’s guide. This first image shows its performance since the beginning of the 2018 crash (in purple) vs the benchmark (BTC, in white).
Here is how that strategy, which does hold cash when the market is terrible, has been performing this year.
Basically, it’s flat for the year. But that’s still outperforming the benchmark by 60% and the smart money by about 70%.
In sum, this quick update shows you that pursuing a strategy that rotates out of cryptos when market conditions are terrible really does outperform. We have our own paid services for that here, but we invite you to learn the principles for free starting here (with Lesson 1).