Coinshares research: investment portfolios can benefit from the impact of cryptocurrencies
22.09.2020 • Просмотров:

Coinshares research: investment portfolios can benefit from the impact of cryptocurrencies


A recent report From coinshares, a digital asset management company, said that investors can benefit from the percentage of exposure to crypto assets in their overall investment portfolios.

Bitcoin improves profitability and diversification

Anyone who has had any experience trading cryptocurrencies or even just buying and storing Bitcoins will know that the outstanding cryptocurrency and its various alternative siblings are subject to volatility.

Although there are periods of relative stability, the price of Bitcoin and other cryptocurrencies usually fluctuates quite often, and intimidates investors who want to add some crypto assets to their portfolios.

Key findings from the report are that a small percentage of Bitcoins in an investor’s portfolio “has a huge positive impact on risk-adjusted returns and diversification, compared to other alternative funds.”

In addition, the analytical company explains that due to the fact that Bitcoin is not correlated with other financial means and instruments, It has become an alternative asset that can protect investors from major economic cycles and events.

It is generally assumed that BTC has a high yield, but it does so by adding significant risks (volatility) to the traditional portfolio of stocks or bonds. The last short conclusion is that quarterly adjustment of the crypto asset’s inventory to the desired percentage can limit volatility and increase profit.

Crypto assets are a great way to diversify

The report highlights a number of points from its analysis that show that BTC increases profits and increases the balancing of the investment portfolio, regardless of when the investment was made.

To reach these conclusions, Coinshares created a database of daily earnings from 2015, when BTC became available as an exchange product. The company created a “traditional balanced investment portfolio with 60% stocks and 40% bonds” and added “a small amount of Bitcoin assets” in addition to an equal percentage of stocks and bonds.

Given that the analysis sees Bitcoin as an early-stage crypto asset, Coinshares has rebalanced its BTC holdings on a quarterly basis to reduce volatility.

The experiment and data show that Bitcoin, despite the volatility of its market value, improved its annual profit from 9.3% to 18.8% , while constantly rebalancing to 4% of the investment portfolio share. Analysts used the Sharpe ratio to determine the true value of the return on investment:

“The Sharpe ratio of an investment portfolio showed how good or bad the return is relative to the risk taken by the investor. It is generally assumed that any Sharpe ratio above 1 has a positive impact on the investment portfolio. In this case, we see a coefficient of 1.69, while the correlation with the underlying investment portfolio is significantly reduced by 15%.”

Coinshares also conducted data-based comparisons of PTS and other traditional assets that are used to diversify away from adverse market cycles and conditions. Data shows that over the same time period, Bitcoin outperforms other diversifying assets.