Over the last two decades, ETFs have received a wide range of attention for most investors. The year 2018 brought this type of investment to the world of cryptocurrencies. Product Bitwise 10 Large Cap Crypto Index (BITX) monitors the total yield of BTC, Ethereum, Cardano, Bitcoin Cash, Litecoin, Solana, Chainlink, Polygon, Stellar and Uniswap.
The process of investing in a single index with a weighted average market capitalization can be an ideal way to spread risk and gain exposure to a wide range of assets. But what about the most popular cryptocurrencies in terms of gain and volatility protection?
Crypto indices vs. BTC
According to Delphi Digital, investing in the biggest cryptocurrency seems to have been a better choice than investing in Bitwise 10.
“Indices are not designed to outperform individual assets, they should be at a lower risk than holding an individual asset, so it is no surprise that BTC outperforms BITX purely in terms of cost.”
It can therefore be stated with certainty that the advantages of investing in indices compared to BTC are not as significant as they seem at first sight. Indeed, volatility in the crypto market often has a very large effect on the altcoins themselves.
ETH vs. DeFi
Decentralized finance is gaining more and more prominence mainly thanks to popular DeFi exchanges such as UniSwap, SushiSwap. The DeFi Pulse Index (DPI) project works with allocations of the 14 best DeFi tokens such as UNI, SUSHI, AAVE, COMP, Maker, SNX, YFI and others.
A comparison of DPI and Ethereum performance yielded surprising results. ETH was able to win in terms of profitability and volatility. Although this comparison is not entirely accurate, the risk has again been shown to be higher for indices.
“Putting BTC and Ethereum will bring you lower risk and better profits at the moment.”
BTC and ETH have thus shown that they can provide investors with a lower risk compared to crypto-index funds. These offer exposure to more assets.
Disclaimer: This article is for information purposes only and should not be construed as investment advice.