There are reasons why we need to include stable coins in our crypto portfolio. I didn't consider them seriously enough until now. I came out with three today.
1. Buying the dip
Having an allocation of stable coin in the immediately accessible stash of crypto is important for buying the occasional juicy dip. Keeping them in the bank and having them on ramp when you want to buy the dip is often too late. I often procrastinated in effecting that on-ramp from fiat to stable coin, resulting me to miss out on the sudden dip.
The way I might do things differently is to allocate a portion of the stable coin for buy orders set at low prices for crypto I want. This way I can get the 'discount' when there is a sudden dip. Of course, the risk is that it might be a dip that continues, and then it would be like catching a falling knife. The way to mitigate that would be to spread out the buying zone. In anycase, an allocation of stable coin in the account is important.
2. Taking profits
When we are 100% in, and hodling, we may make the mistake of not taking profits when the price pumps, only to see it come down and losing the paper gain. It is common to see price in crypto pumps, and then correct. The ones that take profits, gain. Period.
When I don't have a stable coin allocation, I automatically don't have a "take profit plan". The mindset is of hodling, and it can be a mistake when things go very wrong. Furthermore, this "take profit plan" is important to execute #1 above so that dips can be bought.
3. Peace of mind
They always say, if you are not sleeping well because of your investment, you are investing too much.
The actual fact is, if you have stable coin stash that you can deploy, it can give you a sense that your pockets are deep enough. This can in turn give you a peace of mind. This translate to better trading decisions.
This may well be a psychological trick, but knowing that you always have something to fall back on is always comforting. Even when market are down, you know you can bear the loss because you don't need to liquidate those losing trades.
Conclusion
One mistake that new crypto traders or investors make is not having a stable coin allocation. Having spare fiat money in the bank is not the same as keeping stable coin in the trading account, in my opinion. The caveat is that we bear the risk that the stable coin we hold or the exchange we use could become problematic suddenly. That is another issue altogether. But generally, I take these three points to heart. Even as I DCA, I will DCA into the stable coin.
P/S: This is not financial advise, just something I would do. Do your own research before investing.
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