Track your portfolio in Bitcoin, Dollars... or both?

A debate which divided crypto investors since forever. Some argue that it's better to increase the Dollar-valuation, while others prefer to get as much Bitcoin as possible. Let's explore why the correct answer is neither, while emphasizing strengths and weaknesses of both.

Track your portfolio in Bitcoin, Dollars... or both?

Let’s first assume a couple of things: we don’t care about taxable events, variances in regulation, volumes and the fact that until quite recently you could trade most altcoins against Bitcoin. Instead, we rather focus on the flaws of these two arguments.

The goal is to increase our net worth no matter what, so let’s dive into why both sides think they are right while the best is probably a mix of both.

The case for trading against U.S. Dollars

We start with the U.S. Dollar rationale here. Bear in mind, using any other fiat currency wouldn’t change the conclusion. So, why should we measure growth against fiat/stablecoins (such as EUR or $USDC)?

The reason, they say, is that national fiat currencies are still what we use to buy stuff in the ‘real world’. This is how we measure if we can afford a car or a house. Granted, this is likely a temporary occurance until crypto mainstream adoption has advanced. Fiat money is the most valuable metric to value our gains and overall wealth.

So what's wrong with this approach? Well, nothing! It's a perfectly good way to track your portfolio. But when we look at our goal (increase our net worth), we could ask ourselves: is there is a different strategy to perform better?

If the crypto market is going sideways, with sporadic pumps or dumps, it probably doesn’t matter which asset you trade against. However, what if we are in a clear trend instead, such as the repeating bear-and-bull cycles?

Let's say you put US$1,000 into a coin you like and take out US$1,500 some time later. Well, congratulations! You surely made a good profit! But if Bitcoin went up more than 50% in the same period, it would have been a better play.

Here is where the 'stack sats' (stacking Bitcoins) argument comes in.

The case for trading against Bitcoin

Let’s now consider the opposite reasoning, which considers it to be better to trade against BTC no matter what. Increasing your Bitcoins is the holy grail, as we all believe in fundamentals of crypto anyway, right?

Accumulating Bitcoins (or 'stacking sats') allows you to constantly look for opportunities to make more Bitcoin which, over the long run, will appreciate even more — making your sweet Lambo money. 🤑

But, what happens if we are not in a bull cycle?

In that case, the fiat valuation of your portfolio doesn’t really grow over time. In fact, it probably declines dip after dip. You may even end up losing more money than you put in.

Measuring your portfolio in USD instead of BTC (or better sats) is probably the way to go during these times. We accumulate Dollars to buy more Bitcoin later on at cheaper prices. Unless, you don’t really mind waiting a few more years to be in profit again (which is totally fine, by the way).

As always, the world is not as black and white, and more often than the solution is somewhere in the middle of the two extremes.

Be ready to change your approach

So, what is the — in my opinion — best way to track your portfolio?

Neither one of them, but instead, the best strategy is just a matter of adapting to the current market situation. It’s not related to how much we believe in crypto long-term. Rather, it's a way to optimize and protect your wealth.

During an uptrend, I'd suggest accumulating more Bitcoin and therefore focusing on exclusively investing in assets that perform at least as well as BTC, but preferably have a higher upside (e.g. Ethereum).

During a downtrend, I'd suggest to accumulate more fiat money instead. Focusing primarily on assets that can increase your Dollar value (or equivalent) of your portfolio. This way, when the time comes, we will be able to buy more crypto at lower prices, with our bigger USD-valued portfolio.

With this knowledge, go and accumulate the wealth that you deserve. 🚀

How do you value your portfolio? Do you choose Bitcoin/Ethereum, fiat like U.S. Dollars or Euros, or do you agree with the above and do both? I'd love to hear your thoughts on Telegram.

— Robin