BTC/ETH vs HODL Strategy

Which strategy is more suitable for a long term investment? Do you prefer to just hodl? Or do a 50/50 LP? What about impermanent loss? How about generating some fees with a concentrated liquidity LP? How about a full range LP? Let us know in the poll and comments.

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3 thoughts on “BTC/ETH vs HODL Strategy”

  1. tl;dr: start by just holding both and experimenting with LP with a portion of your holdings. As you learn more you’ll be able to decide which strategy is best for you.

    Longer answer:

    To answer this question you must first answer this one:

    Will the ETH to BTC price ratio change significantly between the time you enter a LP position and the time you exit?

    If you think that ETH will grow more than 2 times faster than BTC (due to innovation?), holding is the best strat.

    If you think that BTC will grow more than 2 times faster than ETH (due to regulation?), holding is the best strategy.

    If you think that the ratio will not change by more than 2x in either direction between the time you deposit & withdraw LP will give you better rewards. Even on mainnet ETH you can get around 10% a year with no liquidity incentives. V3 full range is the same as a 50:50 lp

    Concentrated liquidity gives you much higher APYs and much higher IL – on other words the price ratio ETH/BTC matters even more. If you know what you’re doing it can be very profitable, if you don’t you can get hurt.

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  2. If you’re going to LP just do it on a stable pair. IL is something many don’t understand and it can really lose you money versus just holding.

    I personally like Beefy’s renBTC/wBTC pair on Arbitrum, for example. Not sure what ETH stable pairs there are though

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  3. I don’t understand the poll exactly. Do you mean trading vs holding? Anyway I’m DCA-ing into BTC, ETH and BIT. Then going to hold till the cows come home. Pretty much my strategy.

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