Bitcoin hedge strategy using Dai (the decentralized stablecoin)


#1

Does anyone use a rebalancing strategy to smooth losses and take gains in this volatile crypto market? By using a portfolio of bitcoin and dia, a stablecoin equal to $1, you can buy more btc instantly when prices drop and then take gains by moving from btc to dai when price increase. Hoping to get feedback on this.

I wrote more about it [HERE] (https://medium.com/coinplan-insights/using-maker-dai-to-hedge-your-crypto-portfolio-5c78d65129e9)


#2

Isn’t this the same thing that most of us have been doing for months/years with USDT? Swing in and out to accumulate more. Or am I missing something, other than the fact that Dai is an alternative to USDT?


#3

Yes - at Coinplan they automate the rebalancing of the portfolio so its just one click. Saves a ton of time when investing so you can capitalize on the current fluctuations.


#4

Hmm, let me see if I understand this:

We start off with $6000 in Bitcoin and $6000 in Dai (back in November when 1 Bitcoin ~= $6000).

Bitcoin fell to $3000 (will soon) in December, we use $1500 in Dai to buy BTC to even out the portfolio.

We are now at $4500 in Bitcoin and $4500 in Dai.

Bitcoin falls to $2000 in February 2019 … ( I don’t know if this will happen, it’s a possibility)

Aren’t we just averaging down?


#5

Here’s a better strategy:

  1. When ETH drops to $50 (it’s a when, not if), buy as much as you can.

  2. Lever up your ETH by collateralizing it to make Dai.

  3. Buy ETH with your Dai.

  4. Repeat until your ETH collaterialized doesn’t = 1 Dai.

You are now max leveraged. If ETH shoots back to $1200 or finds new ATH, you only need $50 in Dai to unlock each ETH, not $1200! You can thank me later. Although if ETH falls below $50…

Not financial advice.


#6

That is a great strategy. I wonder how many people are doing that.

Also what makes you feel that ETH will drop under 50$?


#7

Based on the usage of DEX (that’s how you utilized this strat), less than 0.1% of all people that hold ETH are doing that.

Looks like I’m really wrong about ETH price, at least in the short term. I almost always seem to find out about forks later than I want to, but that’s the reason for the 50%+ climb. Still don’t think the price will hold after the fork.

The reason why I think ETH can drop to $50 or below is there’s still a lot of shitcoins that ICOed in 2017 that have held some ETH all the way to the bottom. When they panic sell in 2019, look for ETH prices to crater.