My Hive Long-Term Strategy

in #hive7 months ago

A few days ago, I wrote a post titled 12K HP Milestone Within Reach. This post pondered what to do after reaching 12K HP. I am still short of the goal. But I have been thinking about what to do. I have decided to use my Hive account to do Core Number Compounding . There is a blog post from TravelWriteMoney going over some of the details on how to do it. My decision shifts the focus from having a fixed Hive Power (HP) target to having a dollar value target, which will be 5,000 USD for now.

Here is an explanation of Core Number Compounding from @TravelWriteMoney - Dusting Of My DeFi Skills

Core Number Compounding (CNC) is a trading strategy used in volatile markets.
Choose a Core Number: This is a specific amount of money you're willing to invest. It could be $1000, $2000, or any amount that you're comfortable with. The key is to pick a number that allows you to do quick calculations.
Buy Crypto: You then buy a certain amount of cryptocurrency (like BTC or ETH) equivalent to your core number. The choice of cryptocurrency should be one that you believe will trend upward in the long term.
Sell High, Buy Low: If your investment grows to more than 1% of your core number, you sell off the excess to bring it back down to your core number. If your investment drops by 4% or more, you buy more to top it back up to your core number. This way, you're always buying low and selling high.
Adjust for Market Conditions: This strategy doesn't work well in bear markets as you'll constantly be topping up. In such cases, you might need to have cash reserves or switch to a stablecoin until the market recovers.

In my case, I'm going to modify the plan a bit. But let's walk through this together.

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Choosing a Core Number

My account is currently valued at 3411 USD with HIVE at 0.285 USD. HIVE briefly spiked to 3 USD during the last bull market. I don't expect that to happen again anytime soon. However, I do expect that the price will rise along with the value of Bitcoin. HIVE, like all other cryptos, seems to follow along with the price of BTC. So, I'm going to set my initial core number at 5000 USD. I'll make it a point to keep the value of my HP around 5000 USD.

The 5000 USD value is just a starting point. If at any time my HBD exceeds 5000 USD, then I'll have to increase the core number to a higher number. The number is not important. It just serves as a measuring stick for high tide and low tide of the HIVE market.

Buying HIVE

This part of Core Number Compounding will be modified. I'll continue blogging to earn HP. And HP also increases with inflation and curation. I won't be buying HIVE out of pocket to reach the 5000 USD target. I'll earn my way up, making this a long term project. Furthermore, until I reach the 5000 USD goal, I'll be converting all my HBD to HP. I have roughly 1600 USD to go. But this number could easily disappear if HIVE goes up to 0.400 USD. In other words, reaching my goal will be a combination of my own efforts and market volatility.

Sell High, Buy Low

If my HP value exceeds 5000 USD by 50 USD or more, then I'll swap HIVE for HBD. If the value dips under by 200 USD or more, I'll swap HBD for HIVE. With Core Number Compounding, buying low and selling high are built in to the system.

To be fair, things won't always work out the way Core Number Compounding is intended. For example, I might earn 50 USD in HP from blogging, curation, and inflation rather than market volatility. It doesn't invalidate the plan. In fact, it's a good problem to have.

One challenge I foresee is the need for liquid HIVE and HBD to take swift action. Otherwise, I would have to wait a week to power down enough HP to convert to HBD, by which time the value may have changed. Or I may need to wait three days for HBD Savings to become available to top up on HP. So, I'll need 50 liquid HIVE ready to convert to HBD. And I'll need 200 liquid HBD ready to convert to HIVE.

Adjust for Market Conditions

This part is somewhat a philosophical debate. Conventional wisdom tells you to not try to catch a falling knife. You let it fall, then pick it up from the floor. Yet, if the price of HIVE is dropping, we generally buy more, right? Unless the Hive developers do something completely boneheaded, I don't expect HIVE to go to 0 USD. Therefore, as long as I have enough HBD, I should be able to buy increasingly more HIVE as the price drops.

Assume I have the target 5000 USD worth of HIVE and 5000 USD worth of HBD. Then HIVE would have to go to zero in order for me to spend the entire 5000 HBD topping up. As the price keeps dropping, I'd be able to buy more and more HIVE. I'd be reloading the cannon to fire at the next bull market. In the meantime, I'd still be earning rewards and HBD interest. With other cryptos, you really do have to worry about price going to zero.

Final Thoughts

Don't get too caught up on the 5000 USD number. This is just a starting point. Eventually the number will have to go up to 6000, 7000, . . ., 20000 USD. It's just a number.

With market fluctuations, my HP will be all over the place. Mentally, this is a big change in thinking about my Hive goals. I can imagine there will be a period in which I may pass Orca more than once as my HP fluctuates around that range.

Other than being a trading strategy, Core Number Compounding gives me a new way of seeing my Hive account, of valuing it. Although I won't be able to put this into effect for some time, I'm excited to have a quantified goal. Measuring in HP has been very abstract. One day it's worth 10,000 USD; another day it's worth 3500 USD. Now, I can set a number that my account should be worth, and keep it there. And with some sweat equity, interest, and inflation, I can keep increasing that core number over the years.

Originally posted on Shaine Mata. Hive blog powered by ENGRAVE.


I remember this strategy from the TWM post and the YT video which talks in depth about how the Core Number Compounding strategy works. I'm intrigued by this and look forward to reading more about this.

It will be a while with the price of HIVE dropping. But the light at the end of the tunnel is the anticipated bull market next year.