Our Best Idea for Investing in Cryptocurrencies
A follow-up to our Cryptocurrencies posting from last week
Last week we posted on Cryptocurrencies with the following message:
Given falling demand for U.S. Treasuries by many foreign central banks, the U.S. appears to be planning to put a bid on U.S. Treasuries through promoting the rise and interest in cryptocurrencies, some of which require purchases of U.S. Treasuries as collateral backing;
The rise and interest in cryptocurrencies is funneling a considerable level of money into cryptocurrencies as an asset class, instead of into the real economy, commodities and hard assets - this is serving as an inflation “honey-pot” or “heat-sink”, thereby diverting money from excessive money printing in recent years away from commodities and hard assets;
The rise and interest in cryptocurrencies is generating momentum and buy-in to the eventual use of permissioned (controlled) cryptocurrencies that are software-programmable and government-controlled, which will likely be implemented by commercial banks not central banks as a Central Bank Digital Currency (CBDC); without a Digital Bill of Rights in place, these permissioned cryptocurrencies will severely control and limit personal and human freedoms and liberties, even whether or not your cryptocurrency account can accessed or used outside of your home country;
Most cryptocurrencies are not backed by anything like a commodity or the full faith and credit of a government, and can be “printed” ad-infinitum in a manner similar to government fiat money, bringing the usual loss of currency purchasing power and currency dilution results.
In terms of investment, our preference has been and continues to be in value-investing based assets emphasizing great cash-flowing businesses many with embedded aspects of hard assets. We have built a repeatable investment qualification process over many years, and with three years of actual performance results plus many years in back-testing results, our Cedar Portfolio has outperformed on a risk-adjusted basis most indices not just in the equities space but also in the cryptocurrencies space. Link here to info on our portfolios.
What Idea We Assess Makes Sense on Investing in Cryptocurrencies
In the cryptocurrencies space, we are not generally interested in investment holdings except for the following idea which we thinks makes sense - we pointed out this small set of cryptocurrencies which have limits on the token issuance:
Bitcoin (BTC): Capped at 21 million coins
Litecoin (LTC): Modeled after Bitcoin, Litecoin has a maximum supply of 84 million coins
Cardano (ADA): The total supply is capped at 45 billion ADA tokens.
Binance Coin (BNB): Initially set at 200 million tokens, Binance employs a token burn mechanism, periodically reducing the supply to eventually reach 100 million BNB.
Chainlink (LINK): The total supply is fixed at 1 billion LINK tokens.
Bitcoin Cash (BCH): As a fork of Bitcoin, it shares the same maximum supply of 21 million coins.
Bitcoin SV (BSV): Another Bitcoin fork, BSV also has a 21-million-coin cap.
Zcash (ZEC): This privacy-focused cryptocurrency has a maximum supply of 21 million coins.
Dash (DASH): Dash has a maximum supply of 18.9 million coins.
Monero (XMR): Monero has a capped supply of 18.4 million coins.
Solana (SOL): Solana has a capped supply of 489 million SOL tokens.
Avalanche (AVAX): Avalanche has a capped supply of 720 million AVAX tokens.
VeChain (VET): VeChain has a capped supply of 86.7 billion VET tokens.
Tron (TRX): Tron has a capped supply of 100 billion TRX tokens.
Neo (NEO): Neo has a capped supply of 100 million NEO tokens.
What this list represents is a subset of all the cryptocurrencies which are not like government fiat currencies - in other words, they cannot be printed ad-infinitum.
Therefore we have identified the following investment idea for our portfolio …