How to build a crypto portfolio in 2024

PLUS: When & how you should sell

June 01, 2024

GM! Welcome to Milk Road PRO – your weekly crypto boost that’s as thrilling as finding a $20 bill in an old jacket. This week, we’re showing you how to put that $20 to work!

We believe that crypto will reach a $10+ trillion market cap in the next 12-18 months.

FYI: it currently sits at $2.5 trillion.

Oh, and we think it will hit a $100 trillion market cap in the next decade. 🤯

Source: TradingView

Crypto might just be the biggest investment opportunity many of us will see in our entire lifetime.

If you manage to capitalize on this moment in time, it can be life-changing for you and for generations after you.

While this opportunity is true, the unfortunate reality is that many investors in this space will mess it up.

They will invest in the wrong assets.

They will buy the top.

They will sell the bottom.

They will lose their capital using leverage or risky protocols.

And they will do this over and over again until crypto goes mainstream and the opportunity no longer exists.

It’s unfortunate, but we see it cycle after cycle. Humans are innately terrible investors, because we often let emotions like fear and greed control our investment decisions.

Even the professionals do it, but not the PROs - Milk Road PRO members that is. Not this time! We won’t let you make these mistakes. 🤝

That’s why today we’re taking the guesswork out of capitalizing on crypto's upside.

In case you missed our announcements earlier this week, we launched the Milk Road PRO Portfolio.

This is a simulated portfolio reflecting the Milk Road PRO research team's view of what an ideal crypto portfolio could look like.

Today, we’re going to walk you through how to best use this new feature. By the end of this, you hopefully understand how to:

• Better manage your investments

• Allocate your capital efficiently

• Take profits successfully

• Stay ahead in crypto long-term

This might be the most important PRO report we have ever written. Let’s jump right in 👇

THE MILK ROAD PRO PORTFOLIO 📊

For starters, click here to take a look around the live portfolio.

First up, don’t expect a 1000x on anything we have in our portfolio – that’s not the game we are playing here. 

We’ve designed this portfolio to help you thrive during crypto bull markets and minimize losses during bear markets.

Generating wealth in crypto does not happen overnight, despite what Crypto Twitter and YouTube will have you believe. 

It’s about building a sound portfolio with a solid strategy and compounding returns year over year.

Sure, you can gamble on memecoins and shitcoins hoping to strike it rich, but like the lottery, 99.9% of you will lose.

Let's be serious: How many people do you know that actually struck riches in Vegas?

Instead, you can flip the odds in your favor and ensure that you capitalize on the upside of crypto. 

While nothing in investing is a guarantee, this portfolio and strategy aim to help you succeed, as long as crypto does.

Breaking down the portfolio, we follow a simple 80/20 rule.

80% of our assets sit in low-risk, high-reward major crypto assets. 

These assets are like your Apple and Google of the crypto world, except rather than a good year being 20-50%, a good year for these assets is more like 200% to 500%+.

In our opinion, it's crazy to not have significant exposure to these assets during a bull run. It’s about the easiest investment one could make.

20% of our assets sit in high-risk, high-reward crypto assets. 

We don't compare these assets to fiat currencies like USD. Instead, we measure their performance against the native tokens of their respective blockchains, like $ETH or $SOL.

If we don’t think they can outperform the native asset, it’s not worth putting in this bucket.

As you’ll see in the portfolio, we have allocated: 

• 47% to $ETH

• 26% to $SOL 

• 10% to $COIN

Yeah, we know, it’s not technically 80%, it’s 83%, but you get the memo. 

$BTC is the only other asset we consider a “crypto major.” However, we believe Bitcoin dominance has peaked this cycle. 

The best risk/reward now lies in other majors like $ETH and $SOL, especially with the approval of $ETH ETFs. Therefore, we no longer hold any $BTC.

Source: TradingView

To be clear, this doesn’t mean we think Bitcoin won't do well over the next 12-18 months – we just see better investment opportunities at this point in the cycle. 

Things could change, and we might include $BTC in our portfolio again (we held it over the last 2 years).

In the 20% high-risk side of the portfolio, we have allocated to various protocols across different use cases within the crypto ecosystem, such as: 

• Staking & restaking

• Stablecoins

• DEXs

• L2s

• Gaming 

• And more.

For our reasoning behind holding each of these tokens, you can view this on the Asset Analysis tab in the portfolio itself. 

By the way, the assets and the allocation to the assets we shared are what we believe in the most, this does not mean it’s what you need to do. 

Feel free to use our portfolio as a skeleton and swap out our assets for what you believe in or change the % to what fits your goals. 

This portfolio is simply us showing you how the Milk Road PRO team would set up their portfolio.

When valuing other investment opportunities, in general, we look for an investment to have most, or all of the following:

• High-quality team

• Genuine product market fit (not boosted by token incentives)

• Real, growing, and sustainable revenues or potential for such (not inflated by hype cycles)

• Strong narrative or tailwind (aka pumpamentals)

• Favorable tokenomics or a clear path to achieving them

Lastly, we seek assets that are likely to outperform $ETH and $SOL in the next 12-18 months; if the charts don't support this potential, we won't hold them.

On that note, let’s move to the time horizon and strategy around actively managing this portfolio.

TIME HORIZON AND ACTIVE PORTFOLIO MANAGEMENT 🔮

As we said above, this isn’t about finding a 1000x next week, this is about compounding excellent results year over year while also preserving our capital.

This is the key to successful investing and creating generational wealth.

Just ask any of the investing greats: Warren Buffet, Charlie Munger, George Soros, Benjamin Graham, etc. 

While they all have (or had…) different investing playbooks, the one thing they have in common is compounding results over extended periods of time.

We are here to ride the crypto wave from $2.5 trillion to $100 trillion and we recognize that this will occur over many years, not in a few months.

Our time horizon is long-term. However, our portfolio is actively managed around crypto cycles. 

What this means is that we always remain allocated to crypto, but the amount and risk levels of our crypto assets are optimized based on where we are in the market cycle.

If you need a refresher, read “The Real Reason For Crypto Cycles” report. 

We believe we're about halfway through the current bull market. 

While our timing may change with new data, we estimate 12-18 months remain before a correction, which could be a multi-year bear market or something different—still unknown.

At this stage, we believe it is an opportune time to take on more risk, though we think that the buying opportunity for this stage is soon ending.

While there is still plenty of price appreciation and time left in this stage of the market, the window to allocate at favorable risk/rewards is closing.

The goal is to be well-positioned during fearful market times and take profits or remove capital when the markets overheat, typically when greed and euphoria peak.

A rule of thumb in timing cycles and allocating capital is this: 

• The easiest time to buy crypto is generally the worst time to buy crypto.

• The hardest time to buy crypto is generally the best time to buy crypto.

The Milk Road PRO portfolio is designed to capitalize on the latter stage of a bull market, featuring no Bitcoin or stablecoins, and plenty of application tokens.

In contrast, when we are reaching the top of the cycle and/or are heading into an extended price decline (bear market), we plan to be allocated more heavily to stablecoins and any crypto exposure will be exclusively to the major crypto assets.

Throughout the rest of this bull market, we will be looking for opportune moments to buy additional high-risk application tokens that we believe will outperform the majors. 

Stay tuned in our Discord channel, "pro-team-signals," for immediate trade signals or keep an eye on the Thursday newsletter for weekly portfolio updates.

Now let’s talk about allocating capital to your portfolio.

HOW TO ALLOCATE TO YOUR PORTFOLIO 📈

When new members sign up for Milk Road PRO, we ask them how much of their net worth is in crypto – turns out, most of us have the majority of our net worth in crypto.

If you don’t yet and you have some capital ready to deploy, here’s how we recommend you go about it.

Rule #1: Never go all-in in crypto

Everyone should have cash reserves available as a rainy day fund. The last thing you want to become is a forced seller.

Think of this scenario: You’re all pumped about crypto so you go all in today. 

2 months down the road a big hack happens or China decides to ban crypto (it happens every cycle), the crypto market tanks 40% (it happens every cycle too). 

At the same time, your car breaks down, you lose your job or your AC in your home breaks… Now what? 

You’re forced to sell your crypto at a loss to pay for your real life expenses.

Don’t be this person. Be smart and hold a rainy day fund in cash regardless of how bullish you get this cycle.

Rule #2: Focus on generating more income

Unless you’re a full time professional trader, you do NOT need to spend 50 hours a week trading crypto. 

Don’t quit your job or take time off to trade, instead, double down on generating more income so that you can take a certain % of every dollar you earn and put it into investing in crypto, while still affording to live.

And when you find your next $20 bill in your old jacket or jeans, add it to your portfolio. Every dollar counts. ;)

Ok, now that the basics are out of the way (...crazy that we need to remind you degens of this 😂), let’s get into what to do with the capital you have available to invest in crypto right now.

Generally, we recommend dollar cost averaging (DCA) a certain % of your monthly profit into crypto. 

Each month take whatever percent of your income you can afford and allocate it across your portfolio.

If certain assets are outperforming, put more of that % into those that are underperforming (to rebalance your numbers back to the original weights), assuming you still believe that the asset is a good buy. 

In our portfolio, we signify that with a 🟢.

If you have extra capital available now, you can either deploy it evenly over a weekly or monthly basis if you’re unsure the direction the market will take, however if you’re reading this around the time this report launches, we wouldn't recommend waiting much longer.

Moving forward, the game plan is very simple. Every month, on a specific day, DCA with an amount you can afford regardless of if prices are going up or down. 

Remove the psychological bias that comes from market movements and simply auto-purchase.

The strategy does not change until the market gets overheated and we feel the top is coming. 

For help identifying the top of this cycle, make sure to follow the “Where Are We In The Cycle” indicators every Tuesday in the Milk Road newsletter.

Rule #3: Plan for taxes

Gross. But important. In the next section, we will get into the when and how to take profits. 

One thing to note as you allocate your capital is that in most jurisdictions any profits you take will be taxed. In some countries, this can be a significant amount of your profits.

A simple solution to this is purchasing some crypto offchain. Opt for the ETFs in a tax-free or tax-friendly investment account. In Canada for example we have a TFSA and RRSP and in the USA they have a Roth IRA.

While we don’t recommend you hold all of your crypto offchain, it is wise to hold a portion of your $ETH, $COIN or other available assets that you are planning to sell.

Ok, onto the final section and one that many struggle with - taking profits.

WHEN AND HOW TO TAKE PROFITS 💰

At the beginning of this report we showed you the following chart of crypto heading to a $100 trillion market cap…

Source: TradingView

But technically, this chart is misleading. 

While crypto generally moves up and to the right on a long-term timeframe, it does so with some wild swings in between. 

Since 2014, Bitcoin has had three 1-year long pullbacks of more than 77%.

Source: TradingView

The other crypto assets are even worse. It is before or at the beginning of these huge drawn out pullbacks, when crypto is significantly overbought that we want to take profits and completely rebalance and reorganize our portfolio.

To be clear, we are not trying to time the market and take profits on every pullback, as crypto typically has 10 or more significant pullbacks (20%+) within a bull market. 

Timing these is not necessary as they tend to be short lived and followed by significant price increases (see the 12 pullbacks from the 2016-17 bull market below).

We are not short term traders, instead we are looking to rebalance and reallocate capital to maximize our gains and minimize our losses during the broader crypto cycles.

But you need to understand that timing the top is not easy. You can’t plan to simply sell the ‘pico’ top and then buy back at the very bottom – almost nobody can do this consistently. 

Look at how many pullbacks there were in the image above – it’s incredibly difficult to know which one of those was the final end of the bull market.

Not to mention, during the very top you will be euphoric and screaming that the supercycle is here and we’ll never have another bear market again. 

It sounds stupid now and you’ll be sure that won’t be you, but trust the Milk Man, emotions are extremely hard to handle when your net worth is going up by 10-30% every week.

Instead, it takes some serious analysis, a lot of luck, removing the emotions by sticking to a strategy and ultimately, accepting that you may miss out on some profits because you won’t time it perfectly. 

Ok, now that we understand this, here’s how it works:

As we near the top of the cycle, we recommend beginning to Dollar Cost Average out of your assets. 

Again, you won’t call the top, so don’t sell everything at once. Instead, the goal is to sell on the way up (hopefully near the top) and again on the way down (hopefully near the top too).

This can be on a monthly basis or on a weekly or bi-weekly basis – it doesn't really matter. 

The key is that you simply stick to your plan regardless of price action (remove your emotions!).

We recommend you start by selling your high-risk assets and then follow with the majors. The amount of your portfolio that you sell depends on your unique situation. 

Ask yourself:

• Are you taking profits to buy a house? 

• To pay off loans?

• Or do you not need the money right now?

If it's for a specific reason, sell that amount (accounting for taxes). 

If it's not for any reason other than to maximize profits and you’re very active and risky, then sell the majority 

If you're less active and more of a long-term holder, then sell a small amount or none at all. 

There’s no perfect way to do it – it’s all depending on your unique situation.

However, the important part is to not hold ANY non-majors heading into the bear market.

What you sell these assets into is the next question…

Again, if you’re selling to purchase something in the physical world, then simply sell into FIAT. 

If you want to diversify and move some of your portfolio into real estate or stocks or something else then you can do that too.

Otherwise, if the goal is to maximize your returns, we recommend selling into stablecoins and putting them to work by generating yield. 

It is much cheaper to move back into crypto when the time is right and you can find much better yields in stablecoins than holding FIAT.

We’ll provide more reports and guides for generating yield closer to the top of the cycle. For now, we’re still all-in on crypto (excluding the rainy day fund of course!).

For more thoughts around taking profits check out this past PRO report here.

DON’T F*CK THIS UP 🤬

As we said in the beginning, this is one of the greatest investment opportunities we will likely face in our lifetime.

And honestly, it’s not that hard to do very well in crypto. But, most people let their emotions get the best of them. Greed is one hell of a drug!

So, pay attention… We have laid this out on a silver platter for you. DON’T F*CK THIS UP.

All you need to do is stick to your plan. If you do that, you will win.

Let yourself be ok with leaving some gains on the table. Know that you won’t time the top. Know that you won’t get a 1000x… that’s ok!

A 5x or a 10x is still 5-10x better than almost every other investor in the world! 

The professionals celebrate beating a 10%+ gain in a year, why do you think you deserve a 1000x?

The most important thing in investing is controlling your mind, not knowing what assets to invest in. 

You could close your eyes and pick 10 tokens in the top 100 on Coingecko right now and you’ll probably do well in the next 12 months.

But can you follow your strategy? Can you stick to the plan? That is what matters.

Good luck out there friends and we hope you appreciate us adding more features to your Milk Road PRO subscription. 

We’re here to help you invest successfully in crypto. That’s our mission. For more insights, make sure you join our Discord 👇 and our monthly AMAs.

Lastly, enjoy the Milk Road PRO Portfolio. ✌️

Action Step For PRO Members 🥛 

Join the private PRO community now!

This is your all-access hub for engaging directly with the Milk Road PRO research crew and fellow PRO members, diving into live AMA sessions, digital events, and daily robust discussions on market trends, fundamentals, and industry insights.

🚨 Important: Upon joining the Discord, you’ll be asked to fill out a form. Please, please pay attention to 2 things:

1. Enter the exact email address you used to sign up to PRO with.

2. Enter your exact Discord username. To find your Discord username, click on your profile picture in Discord. Your username is the smaller text name under your profile picture.

Do this with bomb-defusing precision—a single typo might lock you out! 😬