Stephen’s note: Last year, my crypto advisory RiskHedge Venture produced a 516% total return. Today, RiskHedge publisher Dan Steinhart and I review Venture’s results since inception, and he gives me a final grade...
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Dan: Today, we’re unveiling the complete track record of RiskHedge Venture since we launched it in October 2021.
First, I want to share a few notes from readers. We sent a crypto survey out last week. Specifically, we asked: “What are your reservations about crypto?”
Thank you to the 700+ RiskHedge readers who took the time to respond. One theme kept repeating:
Scams, not enough transparency, not much trustworthy information. I’d love to hear more from RiskHedge about crypto, because I believe you put in the work and talk to the right people to find small, exciting, and promising projects, just like [redacted].
Another:
None. It’s great fun and the only place left retail can gain an edge—if you avoid the rugs. Being scammed probably the biggest.
Stephen: This guy gets it. Couldn’t have summed it up better myself. Crypto is a place where ordinary investors can gain an edge if they avoid the pitfalls.
Dan: Fair or not, crypto has a reputation for scammers. There’s even a word for it—“rug”—as in having the rug pulled out from underneath you. How do you steer clear of scams?
Stephen: Legwork, and being plugged in.
Every crypto project has people behind it, like any other investment. I meet the founders who run the projects, the venture capitalists who finance them, and the developers who execute on them. What’s nice is, when you’re willing to travel, these people are available to meet in a way that large public company CEOs usually are not.
By shaking a founder’s hand, looking him in the eye, and having a real conversation, I learn what drives him. I look for teams with a trustworthy leader who’s working toward a long-term vision. Scammers never focus on the long term… otherwise, they wouldn’t be scammers.
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Dan: Great advice, but most readers can’t fly to far-flung places like Singapore like you do. Is there a shortcut for people who want to do this analysis themselves?
Stephen: Not really. But the closest thing is studying “tokenomics.”
Tokenomics is the study of how many units of a crypto exist today and how many can or will exist in the future.
At the end of the day, most crypto scams aren’t all that sophisticated. Bad actors inflate the supply of a crypto. Then they market that crypto, often on social media. Money flows in, they keep it, and they deliver nothing.
These scams stick out like a sore thumb when you know how to analyze tokenomics.
Dan: What do good tokenomics look like?
Stephen: Take bitcoin (BTC). There can only ever be 21,000,000 bitcoins in existence. The code guarantees it. After this month’s halving (on or around April 19), bitcoin’s inflation rate will be below 1%.
Ethereum (ETH) has great tokenomics, too. The supply of Ethereum has slowly declined lately. So, each unit is worth more.
Dan: Okay, it’s results time.
We launched RiskHedge Venture on October 28, 2021. With the benefit of hindsight, it was bad timing. Bitcoin had peaked, and it was right before the onset of the crypto winter.
Here’s how four major benchmarks performed from October 28, 2021 through the end of 2023 versus RiskHedge Venture:
Bitcoin: -30%
Ethereum: -47%
S&P 500: +2%
Nasdaq: -1%
RiskHedge Venture: +37%
Bitcoin and Ethereum, down.
Markets, essentially flat.
RiskHedge Venture… up 37%.
What do you attribute this vast outperformance to?
Stephen: Tactically, taking profits when they’re available has been hugely beneficial for our subscribers.
Hivemapper (HONEY) is a good example. We got in at around $0.01. It surged to about $0.12. We took some profits off the table when our gain was about 1,100%.
Then, its price kept moving higher. A lot of people can’t stand that—they see it as leaving profits on the table.
To me, the mental benefit of knowing you’re playing with house money outweighs those concerns.
Dan: An important principle at RiskHedge is: The more volatile an asset, the quicker you should take profits.
You sent an alert last month recommending subscribers take profits on cryptos that were up 300%, 330%, and 650%, respectively.
Before we go, talk about persistence. From where I’m sitting, that’s your “superpower” as an investor.
It’s been possible to make a lot of money in crypto. But the average investor hasn’t. They bought cryptos that never should’ve been bought when high on greed… then sold ones they never should’ve sold when fear ruled over the crypto winter.
You were always there, calmly guiding members. I’ve lost track of the number of crypto advisories that have gone under in the last two years. Some had far more subscribers than us.
Stephen: Thanks. It wasn’t that we didn’t make mistakes—we did. But we addressed them, adjusted, and moved on.
Dan: At the end of the day, you helped your subscribers make money during a time when it was hard to make money anywhere in the markets. Overall, crypto, stocks, and bonds have all struggled since the inception of RiskHedge Venture.
Then, in 2023, you more than tripled the return of bitcoin in a year where it surged 156%.
You can’t ask for more out of a specialized advisory than that.
You get an A+ for 2023…
And an A since the inception of the service.
Last question: Do you think now—April 2024—is a good time to get positioned in crypto, even though bitcoin is significantly more expensive than it was a few months ago?
Stephen: I do, yes. If you look at how prior halving cycles have played out, the gains that come before the halving are usually a fraction of what comes after. Remember, bitcoin is still flat since October '21, despite its recent gains.
Remember the table we looked at last week? If the halving cycle holds true, 2024 and most of 2025 should be great times to own crypto:
Although, I don’t recommend buying bitcoin specifically for reasons I explain here.
Dan: Thanks, Stephen. At that link, readers can get more details on how you’re approaching the upcoming halving, as well as how to claim a membership to RiskHedge Venture.
Here it is one more time. Thank you.
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