It should come as no surprise that the CEOs of Blockchain and Chain, two leading companies in the bitcoin and blockchain industry, have both personally bought into cryptocurrencies.
But their investing strategies sound different, and a lot more restrained, than the broader, vocal crypto crowd. On a panel at the Yahoo Finance All Markets Summit: Crypto on Wednesday, the two entrepreneurs shared their thinking.
Adam Ludwin’s company Chain builds enterprise blockchains for banks and financial giants like Citibank and Visa—private payment rails that don’t typically involve cryptocurrency. Nonetheless, he made his position on digital coins clear: “I think it’s foolish not to have an allocation toward crypto in your portfolio. I think you should have some reasonable, probably single-digit number… Bitcoin itself, every few years it increases in value by an order of magnitude. Will that continue forever? No one knows. But I think, yeah, I think if you’re discerning and you do your homework, it’s an asset class worth owning and having a sort of risk-adjusted portfolio, especially if you have a long horizon.”
Peter Smith, whose company Blockchain is the leading provider of digital wallet software for storing cryptocurrency and will soon add a bitcoin trading function in the U.S., agreed generally with Ludwin’s thinking, but also brought up a concept you don’t hear as often among big bitcoin believers: selling your crypto.
“Everyone should have some meaningful yet small allocation,” said Smith. “I’ve bought digital currency every month for the last, you know, at least five years. I’ve also sold some. You should buy crypto in amounts that you’re not worried about, and you should sell it whenever you start thinking about it once a day.”
That thinking flies in the face of a popular mantra and meme among the cryptocurrency enthusiasts (especially bitcoin and litecoin investors): Just Hodl. The misspelling there is intentional; the meme started back in 2013 when a user on the popular BitcoinTalk forums posted his investing strategy and misspelled “hold” in an all-caps title of his post. Soon enough the motto was printed on t-shirts and hats, and appears in the Twitter profiles of many a bitcoin believer.
The message of the zen mantra: Don’t freak out about the daily ups and downs of cryptocurrencies; don’t try to sell when it’s way up, or panic when it’s crashing; just hold your coins.
But when Smith mentioned selling off crypto, Yahoo Finance asked, “What about ‘Just Hodl'”? Smith replied, “I don’t believe in that. I think that’s irresponsible financial management theory.”
While bitcoin’s price has sunk in 2018, it rose 1,200% in 2017 and it’s still up 35,000% from five years ago. Those who bought in early have made big returns. But when should they sell?
Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.