I calculate my portfolio in BTC, the obvious goal is to earn more BTC. If alt X cost 0.1 BTC or USD 500 and I hold it while the BTC price rises 500 USD I won't be able to sell it at 0.1 BTC or USD 1000 but rather 0.05 BTC or USD 500 due to the BTC price increase and the alt not rising with it. I might still be ahead or break even in USD but in BTC I'm at a loss.
How do you guys deal with this?
Posted Oct 17, 2017, 5:45 AM UTC
Great question. If you're looking to accumulate BTC in hopes that it will keep rising in value and recover after after crashes, you have to make sure you're looking at your profits or losses in BTC and not USD. I use Blockfolio app to keep track. You have to add the transactions in manually which is a little bit annoying but I heard that they're working on updating the app so that it can integrate API from the exchanges.
Basically a scenario that you would be looking for is when BTC crashes but alt coins strive. Some people actually anticipate this happening soon, where they predict BTC will crash back down after the fork, or maybe even before, with the anticipation that all the money will pour back into the alt coins.
Blockfolio lets you toggle your profits or losses in either USD or BTC which is neat. For example I'm up in USD on of of my alt coins but I would be up higher if I had held BTC so I'm not looking to trade now as I would take a loss in BTC and a smaller gain if I cash out to USD than if I were to hold BTC in the first place.
edit: typos
Thanks for your reply!
So how do you deal with a price spike in BTC that doesn't follow through in your alts? I view this as a missed opportunity because at the time of the spike I should have been in BTC while I had my BTC tied up in alts. Having my BTC in alts when BTC spikes means I won't be able to trade back to BTC at the same ratio as I came in. That's why I can be in the minus in BTC but in plus in USD.
It took me awhile to wrap my head around this but I do agree with you I should be looking at the BTC values and not the USD values. Unfortunately that means my gains are actually not great at all..
Oh yeah I also wanted to ask if this is something exclusive to crypto or does a similar situation exist in other regular markets?
How do I deal with it you ask? By diversifying my profilio.
I would advise having around 70% of your profilio in BTC and another top coin such as ETH. 20% can go into a mid market cap coin such as NEO. The rest of 10% can go into smaller market cap coins that are riskier.
Did you put your all your eggs in one basket or go all in into a few alts? I would only invest in alt coins that I have thoroughly researched and strongly believe in so that when there is a crash I can wait it out and feel confident that they will recover after.
Sometimes you'll see gains in BTC from your alt coins such as when BTC crashes but alts don't or when your alt coin is rising higher in % than BTC is.
I personally just pick one route and stick with it.. I make a decision when purchasing alts/BTC.
Say I’m going to buy XX amount of ARK for example.. When making the purchase I’ll say “Okay I’m keeping 80% in ark no matter what, I’m willing to trade/take profit/etc with the other 20%”
That is easiest for me. Just make a plan that I’m comfortable with and use it as a guideline.
Do you use the USD or BTC price for this and why?
I use USD price, simply because that’s what I use for budgeting all of my expenses.. It’s just easier for me having everything the same currency.
That way when I look at my income, expenses, holdings/investments of everything (crypto and non) it is in USD and I don’t have to do a quick conversion or anything.
So how do you know your profits regarding ARC are from ARC rising or the BTC price rising?
I just keep track of it.. I use blockfolio, and I also keep my own sheet.
I note how many I purchased and at what price, subtract the fee and then I know I have XX amount of whatever and it cost me $XX.
I’m not trading all that often, so I don’t care about making a 3-5% gain then selling and rebuying or anything like that.
Blockfolio is a good app for keeping track of things.