Investing without Principals
And How to Stay Sane as a Digital Asset Investor
In one of the first editions of this newsletter, I wrote about how the Fold and Lolli apps were turning me into my mother in that they were making me more conscious of my spending and savings habits.
(Here’s my Fold referral link if you too are interested in earning free sats — or fractions of a bitcoin — every day: https://use.foldapp.com/r/3PEVHXNX)
And I’ve realized that if Fold and Lolli were turning me into my mother, then my Gemini rewards credit card in conjunction with Gemini’s “Grow” feature is turning me into my oldest sister — a woman who can do coupon wizardry in ways that allow her to walk out stores with seasonal wardrobes for her two daughters all while spending less than I do on a bagel and coffee in Queens, NY these days.
While I’m not much of a coupon clipper, I am someone who likes to run the numbers in efforts to figure out the best ways to maximize my gains when it comes to crypto credit and debit card rewards.
And today, I’m here to share to show you one way in which I do so.
Before I do, though, please know that this newsletter is not sponsored by any of the companies mentioned in it (or by any companies or entities at all).
Also, I have owned or do own the digital assets mentioned in this edition of the newsletter. My discussing these assets should not be considered a recommendation for you to buy them.
Lastly, none of what I mention in this newsletter is financial advice. I share what I share for educational purposes only.
With that said, here goes:
Step 1: Create an account on Gemini.com.
Step 2: Sign up for a Gemini crypto rewards credit card (no annual fee), which offers a 1-3% reward fee in the form of a crypto asset of your choosing just for using the card.
Step 3: Using the Gemini app or web interface, click on the “Card” section and then click on the “Change reward” button.
Here you can choose the digital asset you earn as a reward when you spend with your Gemini credit card.
I often keep the reward set to bitcoin (BTC), but have also chosen to earn rewards in ether (ETH) and Polygon (MATIC) in the past.
Currently, I’ve been earning Filecoin (FIL) rewards, as 1.) I’m a fan of what the protocol is trying to do (decentralized cloud compute) and 2.) I know that FIL is down 97.5% from its all-time high (In other words, it’s price high was $236.84 and it’s currently trading at $5.71.)
Acquiring some FIL at these levels seems like a deal to me, as usage of the Filecoin network has been increasing:
(And if you are saying to yourself “Why would anyone invest in anything that’s lost so much value?” you’ll also have to ask if Meta — formerly Facebook — is ever worth investing in again, as it’s trading over 75% down from its highs.)
So, let’s say FIL never even comes close to it’s all-time price high again. Let’s say it only gets back to about 20% of what it was worth at its all-time high.
This mean the token will go back to being worth roughly $47 (and, again, it’s currently trading at $5.71). That’s approximately a 900% increase on an asset you earned as a reward simply for using a certain credit card.
But wait, there’s more…
Step 4: If you click on the “Grow” tab through the Gemini interface, you can earn a yield of 7.25% by lending your FIL token.
So, now you’re taking a digital asset you got for free while its price was near an all-time low, and you’re earning a yield on it.
Let me break down how things could (not necessarily will) play out from here:
You earn approximately $100 worth of FIL in rewards while its price is low. You then earn 7.25% APY on the asset from lending it.
Let’s say a bull market comes back around in about six months.
At that point you’ve earned maybe approximately another 1.75% in FIL.
So, now you have $101.75 worth of FIL.
Maybe the bull market doesn’t go as well as you planned and FIL only goes back to 10% of it’s all-time price high ($23 or so).
That means that your $101.75 of FIL is now worth $407 — and this is all without your ever having invested a principal — or an original sum of money used to purchase an asset.
Warning: The main risk here is that lending on a centralized finance (CeFi) platform does introduce counterparty risk, and we saw how real that risk was in the cases of Celsius and Voyager. Gemini has been a trusted institution, but anything can happen and it’s always better to be safe than sorry in crypto. So, if you do use the Gemini card to earn rewards, it’s safest to store the crypto assets you earn in a self-custody wallet and not lend them on the platform. And again, please don’t take what I wrote as an endorsement of FIL. If you do choose to get a Gemini credit card, please choose whatever coin or token you feel is best for you to earn rewards in.
Key takeaway: Investing in digital assets while their prices are low without having to put your hard-earned money to work — especially in these trying financial times — seems like a pretty good deal to me.
Knowing that you are investing with house money essentially is one way to help you to stay sane in the world investing in digital assets.
Speaking of staying sane as a crypto investor, I actually wrote more about how to do so last week…
Digital Assets Can Make You Crazy
I wrote a piece for Nasdaq’s website last week entitled “Crypto and Mental Health: Tips to Help Keep You Sane as a Crypto Investor”.
In it, I discussed how to psychologically and emotionally navigate the ups and downs that you’ll almost inevitably face investing in this asset class.
Below is one of the tips I offered in the piece:
Size your crypto position properly
The term “properly” is subjective.
For some, it might mean not allocating more than 5% of their portfolio to crypto.
For others, your body might tell you when you have too much exposure to crypto.
In George Soros’s seminal text The Alchemy of Finance, he shares how he would feel pain in his back when his portfolio felt off-balance. When he felt the pain, he made changes to his portfolio until the pain subsided.
Our bodies are more intuitive than we sometimes realize.
So, if you feel pain somewhere in your body the way Soros used to feel in his back, you may want to hesitate from taking a fiat-to-crypto trade or consider reducing your crypto position size.
Market Update
I spoke with The Street last week about the state of the market.
Here’s an excerpt from the piece entitled “Crypto Price Check: Fed Rate Hike Spurs Caution Among Traders” in which I was quoted:
Corva said Powell also stated that the terminal Fed Funds rate will be higher than previously expected "and that the Fed expects to stay the course until the job of bringing inflation down is done."
"Upon receiving this message, just about all markets - from bonds to equities to crypto - started to fall," he said. "In essence, Powell has made it clear that he plans to tighten until either inflation comes down or something breaks."
"This isn’t good news for markets, particularly markets for risk-on assets like tech stocks and crypto," Corva added. "Powell is on a mission to bring down inflation and the well-being of financial markets seems to at best be a secondary concern of his right now."
Mainstream Media’s Best Crypto Journalist Kills It Again
MacKenzie Sigalos, writer for CNBC, is IMHO, the best mainstream media journalist who covers crypto these days.
She killed it yet again in the piece linked in the tweet below:
Link to article: “In bankrupt Lebanon, locals mine bitcoin and buy groceries with tether, as $1 is now worth 15 cents”
Sigalos touches on what I discussed in the previous edition of this newsletter, which is that cash in a bank is nothing more than an IOU — and that IOU doesn’t always pay out.
Okay, all done now.
Have a great week, everyone!
Best,
Frank Corva
Twitter: @frankcorva
