Bitwise CIO warns investors that focusing solely on Bitcoin may lead to missed opportunities in other rapidly growing crypto assets.
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Bitwise CIO implored crypto investors to go beyond Bitcoin.
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Some crypto indices outperformed BTC over the past five trading days.
Bitwise CIO Matt Hougan has championed a diversified crypto portfolio after last week’s Ethereum [ETH] 37% pump sidelined many investors. Despite ETH dropping 60% in the past four months amid heightened FUD, last week’s surge surprised many.
Investors are encouraged to diversify beyond Bitcoin to capture significant gains in the evolving crypto landscape.
Go Beyond BTC, Says Hougan
To capitalize on such an opportunity, Hougan urged investors to look beyond BTC. “Bitcoin is the king of crypto assets—the largest, most liquid, and most established. And yet I think most investors should own other crypto assets.”
He referenced the early internet boom in 2004, noting how Google dominated the search market while other companies like Netflix excelled in specific verticals. This analogy serves to illustrate that a similar scenario may unfold in the blockchain space.
Source: Bitwise
Hougan believes that blockchains can offer a range of opportunities, equating them to the general-purpose tech of the internet. “You can use a blockchain to create a better form of money (Bitcoin) or to create a programmable network for transferring real-world assets (Ethereum, Solana, Avalanche).”
He emphasized that each network may yield varying returns over time. “If you’re intrigued by the idea of nearly all the world’s assets moving on-chain—history suggests you’d want to own a basket of crypto assets: Bitcoin, Ethereum, Solana, Chainlink, and more.”
Source: Bitwise
The concept of a diversified crypto portfolio aligns with the rationale behind crypto index ETFs. Hougan noted that traditional equity funds have often lagged behind indices. “Over the past 20 years, actively managed U.S. equity funds have underperformed their benchmark indexes 97% of the time.”
Interestingly, Google Finance data from the lower 5-day timeframe supports his thesis.
Source: Google Finance (Performance as of 14th May, 6:54 UTC)
Compared to other crypto indices like Bitwise Crypto 10 and S&P Crypto MegaCap Futures, BTC rallied less than 1%. In contrast, crypto indices and ETH surged 13% over the same period. This suggests that BTC investors could have gained an additional 13% or more if they had diversified portfolios.
Conclusion
In summary, the call for diversification highlights the potential of investing in a broader range of crypto assets. As the crypto space evolves, staying informed and adaptable will be crucial for maximizing investment returns.
