Barring any major black swan events, we should start to see a reversal in all risk assets this week. Once BTC breaks $22,000, expect to see it attempt a retest of the $32,000 level. Even though we may see a retest of these prices in August, this move will represent a tradable bounce and allow for sentiment to reset. In spite of the volatility we are seeing in all markets right now, Bitcoin and the altcoin market should have a strong close for the year.
In the crypto space, price is more often than not a reflection of public sentiment. In 2018, cryptocurrencies were considered taboo by the mainstream media, but they are quickly coming to the forefront of economic policy, international headlines, and innovation. This is exemplified with a recent remark from Federal Reserve Chairman Jerome Powell, who said a digital dollar could help bolster the dollar’s international dominance.
The creation of a digital dollar has been in the works since the 1980’s, starting as a proof of concept, but within this decade we will see the conceptualization and use of this new technology. Based upon the rhetoric of other central banks such as the Bank of France, it is likely that the United States has a variety of models for a CBDC. As a consequence, there is always the potential that a public blockchain such as XRP or XLM could play a role in a digital dollar.
These two digital assets are actively being used to develop CBDC’s in countries such as Ukraine, Bhutan, and the Republic of Palau. With Ripple and the Stellar foundation actively courting governments around the world to use their blockchain technology for CBDC’s, it is likely we start to see more governments utilize them. Our time frame for the launch of a domestic CBDC is as soon as 2025, but no later than 2030.
The allocation we have set for our model portfolio is designed to mitigate the risk of losing our principal amount and optimizing returns. We have opted to make XRP our biggest position at 30%. We favor XRP above all other altcoins because it has been operating without fail for over 10 years, has a TPS that rivals VISA’s and has deep institutional connections through Ripple. This followed by CSPR, HBAR, and QNT, which comprise an additional 10% each. As a defensive play we are setting aside 6% of our total portfolio to buy Ethereum. We have high confidence that this digital asset will stand the test of time. AllianceBlock, XDC, ALGO, and XLM all have 5% each. Projects such as CORE and SOLO 2% allotments due to them being higher risk investments. We have also set aside 10% of our portfolio to invest in some of our favorite crypto equities such as Coinbase, (COIN) Immutable Holdings, (HELD) and Riot.