Here Is The News: Crypto Index Fund Bitwise Has Delivered 45% Returns In First 2 Months
How has Bitwise delivered high returns? There are many reasons for it. Learn more about them.
The fact regarding Bitcoin is that even as the SEC hesitates in approving the Bitcoin ETFs, there is an index fund for accredited investors that have outperformed cryptocurrency markets. Accordingly, the Bitwise Asset Managements’ Bitwise HOLD 10 Index, has been launched consisting of the world’s top10 largest crypto assets delivered returns of 45% during the first two full months of the operation as it was versus a 1.7% return which was a concentrated investment in Bitcoin during the same period.
The truth is that during the last three months that have been an especially volatile period in the Bitcoin’s price trajectory as the original cryptocurrency rapidly climbed its way to almost $ 20,000 bringing bad news January saw the price fall into a funk dropping by more than 50 percent at one time with a single Bitcoin coming to be worth of $ 9,890.
Hereby the Bitwise Asset Management’s index fund has beaten bitcoin’s returns during both bull and bear markets delivering returns of 78% versus bitcoin’s 39% as by January the fund’s value fell by only18 % versus 27% for Bitcoin.
How Did The Bitwise Beat Crypto Markets?
Here’s how to beat cryptocurrency markets the index has exploited the lack of correlations among cryptocurrencies where according to Hunter Horsley the CEO of Bitwise, ensuring that many large crypto-assets don’t move in the same direction at the same time historically.
It was found that as an example as Horsley says the Dash’s price has around a 1% correlation along with that of Bitcoin which is while NEO and Ethereum have a correlation of 20% and 38% respectively in their prices with Bitcoin. It is thereby that Bloomberg conducted a similar analysis recently and found that cryptocurrency prices had less synchronicity during those periods of trader bullishness and moved in tandem during bearish behavior.
He further states that for a diversified portfolio like the bitwise HOLD10 this has meant better performance than Bitcoin. There is that performance has ensured that the fund’s investors have not runaway during a reversal of fortunes in cryptocurrency markets.
Whereas Horsley says his investors that span a broad spectrum from individuals to trusts and billionaires that have not requested redemptions as in fact some increased their investment during the window and continued to receive investment from new clients adding that there is a continued shift in new allocations for cryptocurrencies.
Here it is a fact that Bitwise may also have new products planned for the future making a splash recently after news that ETF industry veteran Matthew Hougan joins it as vice president of research and development. According to Horsley, it’s absolutely of interest as an ETF or other public fund can provide access through traditional channels to a broader set of constituents and thinking that it will be a great thing for investors.
Later it was specified by Hougan in an interview with the Bloomberg where he alluded to the possibility of as differently structured ETF saying he was working on defining index methodology for the digital asset market saying that these criteria similar to market capitalization as well as weightings should be thereby structured differently from traditional asset classes.
How Are Bitcoin Price And Equity Markets Returns Correlated?
It is here that Bitcoin’s lack of correlation with the broader economy has proved a mixed blessing for the cryptocurrency ensuring an erratic and confusing price movement, where the flip side is that Bitcoin has sometimes acted as a haven for investors interested in an asset class that is independent of the turmoil that afflicts stock markets.
But The Fact Is That Situation Is Fast-Changing
Similar to the bridges built between cryptocurrencies and mainstream economy, there are events in one asset class that may begin affecting those in the other. Here it is a simultaneous crash in Bitcoin price and equity market valuations last week set off a flurry of analyses investigating precedents to establish a correlation between both events. It is this availability of proof that is inconclusive and subsequently the derived results are uncertain.
Finally, What Do Analysts Say?
Thereby the analysts have cited investor appetite for risk as the main reason to connect both markets. While the analysts at Datatrek a research consultancy analyzed three holding periods of 10 days, 30 days, and 90 days for Bitcoin and S&P 500 with the current whipsaw in Bitcoin prices that has 79% and also 52% correlation to the daily S&P 500 returns. It is then that on a 90-day basis the figure has a correlation ratio of 33% and according to analysts the previous correlation ratio of 33%. Thereby the analysts say precious correlation high was earlier when returns from Bitcoin and the S&P500 were in tandem 17% of the time.
Furthermore, analysts say the rising popularity of Bitcoin within mainstream society was the main responsible fact for the correlation. They wrote that since investors have only one brain to process risk, they will surely make similar decisions about cryptocurrencies and stocks when they see price volatility in the latter.