DeFi Season – The Commencement & The Stratagem
Across The Board
Recently, I have been addressing the commencement of more riskier Crypto investment strategies. Initially, leveraged long altcoin positions, and more recently, high-yield Proof-of-Stake projects. As predicted in 2022, September was the perfect opportunity to initiate accumulation. However, this was very much in terms of Bitcoin and other top-tier altcoins. Personally, I prefer to wait for the current phase in the market when it comes to altcoins.
For example, ETH was trading at approximately $1200 in September last year and is currently trading at approximately $1600 after briefly touching $2K. On the other hand, Avalanche was trading at approximately $19 in September and is currently trading at $10. This is when you want to start looking at alts that are not as dominant and are in sectors such as DeFi. A further dip can still occur. However, the scenario is different.
I would consider it unlikely for a dip at the present moment to drag on indefinitely. A correction at this point is unlikely to unfold in a similar way to the dip of September 2022. After all, more than a year has passed since Bitcoin’s bottom. A few months at best, is what I would consider to be a lengthy dip at this stage of the game. The cycle has matured. Eventually, time is on your side.
In my opinion, it’s time to begin looking at the riskier plays in the market, and it’s DeFi’s turn. As I mentioned in my article addressing the building of leveraged long positions, it’s time to begin building positions. Something that I have noticed watching the Crypto community is the lack of knowledge regarding capital deployment. This aspect of risk management is enormously powerful once you understand it.
An investor who is skilled in the art of capital deployment can outperform an “all-in” investor hands down. All of my trading strategies evolve around this key principle. It’s the core of every strategy that I put together. I can’t begin to emphasize how important and powerful it is, and yet there are investors who are completely ignorant of this practice. Exercised correctly, it’s a great way to enhance risk management.
Chapter 1 – It All Begins Here
When it comes to bull market strategies, DeFi is a bit of a no-brainer. Once Bitcoin surpasses its previous all-time high, there’s no turning back. However, you need to already be in the game, if you are to benefit from this strategy. Essentially, that leaves Chapter 1 as the best zone to begin building DeFi positions, which is right now. It’s important to note that we are talking about building.
In other words, we are beginning to deploy capital. We are not simply going to throw the kitchen sink at every attractive DeFi opportunity. It’s a process of building DeFi exposure, and one which is best achieved by maximizing dips and corrections. DeFi is an extremely lucrative sector during a bull market. This is largely due to the additional yield on offer. Essentially it’s a form of compounding.
As I am sure you are well aware, compounding is at the core of wealth creation, alongside passive income. If, as an investor, you are able to incorporate an element of compounding into your strategies, you are likely to experience significant returns over time. The yield on offer during a bull market is also significantly healthier than in a bear market. This also enhances and improves the risk/reward ratio.
As I mentioned in an article from April of this year, DeFi income is extremely seasonal. It requires a very specific and calculated strategic approach. I also address this at length in the article. Now’s the time to begin stocking up and preparing your business for the season. Once the wave hits, one can begin realizing yields as income, or compound them even further into 2025. Both are profitable options.
Final Thoughts
Now is the time to begin building positions. The only sector I am still weary of is the NFT sector. I think it still might be a little premature for NFTs. However, that can change quickly, as well. Things can move exceptionally fast in the Crypto space. Anyway, that’s my two cents regarding DeFi and the approach I believe is the most beneficial. Hope to see you next time. All the best!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
