Bitcoin is again trading above $100,000.
It jumped 11% in the last 2 days, and 270% since August 2023 when I told my Venture subscribers to “buy crypto”:
If you missed the first move, now is your 2nd chance to buy quality cryptos before they start their the next leg higher.
I expect 2025 will be another great year for crypto with bitcoin soaring as high as $250,000 per BTC.
But remember, nothing goes up in a straight line. Crypto is extremely volatile. And it’s important to have a plan to deal with the inevitable ups and down.
Here’s my three-point checklist to maximize crypto profits while minimizing drawdowns…
#1: Barbell strategy
Our RiskHedge Venture’s portfolio uses the barbell strategy, a portfolio construction tool that strikes the right balance between risk and reward. It does so by investing in two distinct types of assets, on both extremes.
On one end, you have “safer” assets. On the other, you have “higher-upside” assets. Just like a barbell, we load the portfolio up on either end, with nothing in the middle.
Invest 75% of your crypto allocation into larger, “safer” cryptos like Ethereum and Solana. Put the remaining 25% into higher-upside tokens.
#2: Position sizing
Crypto is just one asset in an overall portfolio. You should only put a small percentage — say, 1% to 2% — of your investable assets into crypto. Why only 1%–2%?
I believe crypto will be the best-performing asset class in the world over the next decade. But if you have too much money in an asset that gets cut in half every so often, you’ll likely panic. I know many who were shaken out by sell-offs along the way.
Investing only a small chunk of your overall portfolio into crypto allows you to sit tight through sell-offs… and stick around for the big gains that follow.
#3: “Free rides”
A useful rule of thumb: The more volatile an investment is, the quicker you should be to take some profits off the table.
That’s why when we’re up 100%+ on one of our crypto investments, we typically sell half of our position. This way we get our initial investment back and let the rest “ride free.” This strategy allows us to ride cryptos to big profits while reducing our risk to virtually zero.
It’s tough to hit the sell button in a raging bull market. I caught some flak for taking “free rides” on UNI, ETH, and SOL last week. People always feel like they sold too early, even though they still hold half of the position. But speaking from experience, they’ll thank me later.
Bottom line: 2025 promises to be exciting for crypto investors.
P.S: Here are 3 early-stage cryptos I’m watching at the moment.
For more insights, subscribe to my investing letter The Jolt⚡.
I publish fresh research on stocks and crypto every Monday and Friday.
— Stephen McBride, Chief Analyst at RiskHedge
My 3-point checklist to maximize crypto profits was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.