The Case for Diversification Within Crypto Investing
San Francisco • Mar 1, 2018
Many crypto investors only hold a single coin, like bitcoin. This white paper lays out why that’s a suboptimal strategy.
This report explores the value of diversification for cryptocurrency investing. It quantifies the relationship between the performance of different large-cap crypto assets through a number of measures: variability of monthly returns, correlations, and performance during drawdowns. As an example, the analysis finds that the average monthly difference in returns between the top- and bottom-performing large-cap crypto asset during the past year is 300.1%. Also, during the 60%+ drawdown in the price of bitcoin in December-January, three of the top 10 crypto assets posted positive returns, with one rising 69%. Though cryptocurrency has a limited track record, the report finds that there has been meaningful variability in performance. Investors stand to benefit from diversification in their cryptocurrency portfolios.
READ WHITE PAPERBitwise Asset Management is a global asset manager specializing in crypto and onchain finance with a nine-year track record and more than $14 billion in client assets. The firm’s suite of over 70 investment products—spanning ETFs, option income strategies, model portfolios, DeFi vaults, tokenized funds, and staking—helps investors access opportunities across the financial frontier. Bitwise serves more than 5,500 private wealth teams, RIAs, family offices, and institutional investors, as well as 21 banks and broker-dealers. The company is headquartered in San Francisco, with offices in New York and London.
