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Hodl Everything or Take Profits on Crypto Gains?

2017 proved to be a breakout year for cryptocurrencies as a whole as investors saw massive returns on gains made, especially in Bitcoin and Ethereum.

A 1,000 percent appreciation in value from January to December made Bitcoin the major player in the market, but investors who entered the market last year have nothing on early Bitcoin adopters in the years following its creation in 2009.

Those who got their hands on Bitcoin before 2014, where its price fluctuated between $100 all the way up to a $1,000 high, are the real winners. Considering the preeminent cryptocurrency was available for less than $100 for at least four years, early investors will have got their hands on hundreds and thousands of Bitcoin before its meteoric rise in value.

The list of supposed Bitcoin billionaires puts a spotlight on the biggest holders of the virtual currency, but there are likely to be thousands of people holding onto a small fortune in Bitcoin.

Bitcoin Charts

Many early adopters like to promote the ‘hodl’ lifestyle, refusing to sell any of their Bitcoin at any cost. It’s hard to argue against them having seen the rise of Bitcoin over the past 12 months.

Don’t hodl everything

However, early Bitcoin investor and well-known venture capitalist Fred Wilson insists that investors with a large amount of Bitcoin would be wise to practice profit taking, as reported by CNBC this week.

“If you are sitting on 20x, 50x, 100x your money on a crypto investment, it would not be a mistake to sell 10 percent, 20 percent or even 30 percent of your position. Selling 25 percent of your position on an investment that is up 50x is booking a 12.5x on the entire investment while allowing you to keep 75 percent of it going. I know that many crypto holders think that selling anything is a mistake. And it might be. Or it might not be. You just don’t know.”

Wilson posted the advice on his personal blog, in a post grappling with the difficulties of managing a venture capitalist portfolio. The 56-year-old is the founder of Union Square Ventures, which has stakes in a number of technology companies including the likes of Twitter.

Wild ride

Wilson’s sentiments come at an interesting juncture. The past three weeks have been tumultuous for the cryptocurrency market. Marred by volatility, the markets have seen wild price fluctuations with many virtual currencies affected.

Bitcoin and Ethereum prices are caught in a massive bull vs. bear market, as investors look to book profits and stop losses as often as possible.

Nevertheless, Wilson offers some sage advice ahead of an exciting 2018, as more mainstream financial institutions iron out plans to enter the market in different ways. The CBE and CMOE have blazed the trail for Bitcoin Futures, and the likes of the New York Stock Exchange, NASDAQ and Goldman Sachs are all preparing to launch their own offerings in the next few months.

Coupled with the massive influx of users looking to open cryptocurrency accounts, the outlook seems bright, even amidst constantly changing market values.

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Fred Wilson Denies Crash Prediction But Stresses 3-5% Ideal Crypto Holdings

Serial investor Fred Wilson has hit back at press reports that traders should have “10-20 percent” of assets in cryptocurrency.

In a blog post this weekend subsequently circulated by Bloomberg, Wilson, who is a famous advocate of crypto and has expressed caution on ICOs, said that around five percent is a more sensible upper limit.

“I think that’s likely at the high end of what the average person should have, but I also think it’s not a ridiculous number for the average person to have,” he wrote.

He added he himself had crypto investments amounting to around five percent of his portfolio.

A previous post had been taken out of context, Wilson continued, by Twitter users incorrectly propagating the 10-20 percent advisory figure.

In addition, media publications such as CoinDesk had “done him a disservice,” he said, after implying Wilson had warned of an “imminent” Bitcoin price crash.

“[CoinDesk] made it seem like I was predicting an imminent crash, which I was not,” he commented afterwards.

“But just as bad, it has led to a lot of tweets […] suggesting that I also said that people should have 10-20 percent of their net worth in crypto.”

The investment mogul additionally updated his investment levels for different types of trader, with “young and aggressive” permitted up to 10 percent.

“Average” investors, though, should not go above three percent, while retirees “seeking to preserve portfolio value and generate income” should have precisely zero percent of their net worth in cryptocurrency.

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USV's Fred Wilson Predicts 'Big' Cryptocurrency Crash

Venture capitalist and Union Square Ventures co-founder Fred Wilson believes there’s a cryptocurrency crash coming – and he thinks investors need to diversify in order to prepare.

In a new blog post, Wilson recounted his experiences during the dot-com boom and bust of the late 1990s and early 2000s, during which a number of then-well-known internet firms rose to prominence and subsequently failed, taking many investors with them.

Wilson said that he lost as much as 90% of his net worth at the time, saved only by a pair of real estate holdings. It’s that experience, he wrote, that has informed his investment decisions ever since – including the choice to keep a diversified portfolio that includes other assets along with cryptocurrencies.

Relating a conversation with a friend, he said the two discussed “inevitability of a massive crash” in the cryptocurrency space, writing:

“I am certain the big crash will happen. I don’t know when it will happen and I think it may be some time before it does.”

Experiences in the dot-com crash aside, Wilson stated that he still believes people should invest in the market.

“I have advocated many times on this blog that people should have some percentage of their net worth in crypto,” he wrote. “I have suggested as much as 10% or even 20% for people who are young or who are true believers. I continue to believe that and advocate for that.”

That said, Wilson isn’t saying that people should go all-in on the market. Quite the contrary: in his post, Wilson called for the kind of smart investment planning that he he learned about “the hard way” when the tech bubble collapsed.

“I wish I had done it during the internet boom. I did not, but the next time we made a bunch of money, I did. I learned the hard way. I share my story so that others don’t have to,” he wrote.

Image via CoinDesk

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.