Another shit show in the Crypto World...

I didn’t think that I had to do another post like this just barely 6 months after Luna's collapse. But hey it’s the Crypto World. Shit happens… all the time…

So the World's third largest Crypto exchange FTX had collapsed. You can find out more about what happened from this post by Financial horse.

I am fortunate enough not to have any funds in FTX exchange and is hence not immediately impacted by the collapse. However, the crash of the crypto market after this news has already affected my crypto portfolio.

Also with the sheer size and reach of FTX and Alameda Research, I'm sure the ripple effect from their collapsed will get me in one way or another.

As what I have pointed out in my 2018 Crypto Update post, even if Crypto is not making me any money, it should at least make me a better investor.

The very first lesson I'm sure everyone would have learnt by now is always diversify your risk. This is especially true in the Crypto world where histories have shown that even huge and so called "credible" Company or project can fail. It is always wise to spread out your investment just in case anything happen to anyone of them.

For me I have spread out my Crypto across 3 exchanges, Binance, and Gemini. I also have some Crypto in my own software wallet. Hopefully nothing will happen to these platforms but if in the unfortunate event that anyone does, it wouldn’t wipe out my entire Crypto holdings.

This leads to the next important lesson which is for speculative assets like Crypto, keep it to a manageable size in your portfolio. For me, I'm looking at around 5% to 10% of my entire portfolio. This is the number where even if I lose everything, I will not lose sleep over it. But if I catch a 10 or 100 times bagger, that can really make a different in my investment returns.

Last but not least, the one lessons that I have not been doing very well in is portfolio re-balancing. It is always good to balance your portfolio. In late 2021 where crypto was hitting all time high after all time highs, the 5% to 10% of my portfolio quickly becomes 25% to 30% of my portfolio. 

At that point, I should have sold some of my crypto holdings to bring it back to 10% of my portfolio. However, I guess I was being greedy and didn't do that. Eventually the crash happens and now Crypto is down to 5% of my portfolio. 

Well I still believe in decentralization and Crypto. I'm sure they will see their share of ups and downs, success and failures before finding their space in the world. In the meantime, I'm keeping my Crypto holding to a manageable size in my portfolio and hunker down for the ride. 

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Another shit show in the Crypto World... Another shit show in the Crypto World... Reviewed by Valuewarrior on November 13, 2022 Rating: 5

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