Crypto Winter is a Perfect Time to Recalibrate Portfolios, Says Julian Hosp

Crypto Winter is a Perfect Time to Recalibrate Portfolios, Says Julian Hosp
28 May 2022

Luna’s recent crash caused spillover effects into the wider cryptocurrency markets, and with an uncertain macro environment and rising interest rates in the US, the leading cryptocurrencies have seen a 10-20% hit in the past month.

But astute investors shouldn’t fear the looming “crypto winter,” Julian Hosp, CEO of Cake DeFi, a Singapore-based platform offering a range of DeFi products, said in a conversation with Blockhead.

Crypto’s recent crash isn’t new, especially to crypto veterans, he pointed out. “Long-term crypto investors consider such lows and highs typical market fluctuations and the perfect time to recalibrate their portfolios.”

Just like surfing, great investing takes a lot of patience. Bad investors, however, don’t have the patience.

“A decision to invest is often based on facts and information at a particular point in time. If underlying facts change, then investors must reflect on these past decisions and make adjustments. Just like surfing, great investing takes a lot of patience. Bad investors, however, don’t have the patience,” he said.

Education gap

While investing in digital assets has become more mainstream in recent years, retail investors still have a ways to go in terms of understanding crypto investing, according to Hosp, citing the recent Luna crash, which sent shockwaves through the crypto investing community.

The Luna fiasco was a result of LUNA’s price crashing after TerraUSD (UST), the blockchain’s algorithmically pegged stablecoin – meaning that it’s not directly backed by reserves and instead attempts to stay at $1 through a process of arbitrage with a sister token Luna – lost its peg earlier this month.

Read more: [UPDATED] “Terra is more than $UST”: Do Kwon Plans to Revive Blockchain From LUNA’s Ashes

Terra-based lending protocol Anchor, which drew many in the investment community to park their funds there due to its 19.5% APY interest rate, also lost more than half of its total value locked in a week, creating selling pressure on UST.

“What happened with LUNA is a timely reminder that the crypto community should always do their research first before entering any crypto project, especially since the sector is not regulated in the way traditional finance is,” Hosp said.

“As our customers increase engagement in the space, we worry most about the level of understanding and education within the space,” Hosp added, noting that a more established regulatory framework that offers users more protection, while not impeding innovation and growth, will go a long way in encouraging more participation and increasing adoption in the space.

His advice? Don’t put all your eggs in one basket: “In the long term, technology is primed to play an integral part in the finance industry, and some crypto projects are exploring and bending the current limits of traditional finance. Hence, it is always recommended to treat these products with caution.”

What’s needed, in his opinion, is a more established regulatory framework that will offer users more protection while not impeding innovation and growth. “This will therefore encourage more participation and increase adoption,” he said.

Venturing into Web3

In March, Cake launched a venture capital arm, with US$100 million earmarked for investments over the next two years, with a focus on investing in Web3, gaming and fintech startups.

Cake DeFi Ventures, led by partner Nicholas Khoo, is looking for investment opportunities in startups globally, and has already deployed its first investment, in US-based media startup Edge of Company. It is also in discussion with numerous startups in the US, Europe and Southeast Asia.

“We are looking for strategic investments that will bring synergies to Cake DeFi’s core business and long-term goals, especially as we enhance and broaden our Web3 offerings,” Hosp said.

Blockhead Team
Newsletter graphic

Info Blocks In Your Inbox.

If you want relevant updates occasionally, sign up for the private newsletter. Your email is never shared.

Subscribe to our newsletter