Step up your investing game with Kriptomat’s Equally Balanced Crypto strategy that offers an exciting opportunity for investors to diversify their crypto holdings. This innovative approach is part of Kriptomat’s suite of six Intelligent Portfolios, each designed to cater to different investment styles and goals.
The Equally Balanced Crypto strategy stands out by offering a unique way to distribute investments evenly across various crypto assets, striking a balance between small and large-cap coins.
This strategy suits those seeking high-beta market exposure without the extreme volatility of low-cap coins. It offers an innovative alternative to traditional market-cap-weighted investments. Our article covers the mechanics, benefits, and limitations of the Equally Balanced Crypto strategy. Kriptomat’s approach is ideal for both experienced investors and crypto newcomers, aiming to enhance portfolio efficiency.
Intelligent Portfolios and equal weight strategies
In the realm of modern investing, Intelligent Portfolios have emerged as a game-changer, especially in the complex world of cryptocurrency. These portfolios use advanced algorithms and data analytics to make informed investment decisions, offering a sophisticated yet user-friendly approach to managing crypto assets. The essence of Intelligent Portfolios lies in their ability to analyse market trends, assess risks, and optimise asset allocation based on real-time data, making them an essential tool for both novice and experienced investors in today’s digital asset markets.
The Equally Balanced Crypto strategy within these Intelligent Portfolios offers a distinct and innovative approach to investment. Unlike traditional strategies that may weigh assets based on market capitalization or other criteria, the Equally Balanced Crypto strategy allocates the same percentage of investment across each asset within the portfolio.
This method ensures that no single asset or group of assets disproportionately influences the portfolio’s performance. By equally weighting each constituent, this strategy provides a unique balance, effectively giving more weight to smaller-cap assets while underweighting larger-cap ones.
This strategy is particularly appealing to those looking to avoid the market biases inherent in cap-weighted portfolios and to those seeking a straightforward yet effective approach to diversifying their crypto investments.
The Equally Balanced Crypto strategy: principles and mechanics
The Equally Balanced Crypto strategy employed by Kriptomat is founded on several guiding principles, shaping a distinct approach to cryptocurrency investment. Here’s how it works:
- Principle of equal allocation: As the Top 10 Biggest Cryptos, the Equally Balanced Crypto strategy focuses on the ten largest cryptocurrencies by market capitalization. But instead of calculating the allocation of each crypto in the portfolio based on its market cap, each asset is assigned an identical percentage of the total portfolio. This ensures that the performance of smaller-cap cryptocurrencies has an equal impact on the portfolio as that of larger-cap coins, offering a unique balance that is not skewed towards the market’s heavyweights.
- Risk and return balance: This approach seeks to strike a balance between risk and return. By giving equal importance to each asset, the strategy increases the volatility and potential returns of the index. This allows it to capitalise on the growth potential of smaller-cap cryptocurrencies while still maintaining exposure to the stability of larger-cap assets.
- Rebalancing process: The essence of maintaining the effectiveness of the Equally Balanced Crypto strategy lies in its regular rebalancing. Due to the volatile nature of the cryptocurrency market, the value of individual assets can fluctuate significantly. The portfolio is rebalanced every first day of the month to respond to market movements and maintain a consistent risk profile, aligning with the investor’s initial investment objectives.
- Rule-based and transparent: Based on a set of well-defined guidelines and flexibility for handling unforeseen events, the Equally Balanced Crypto strategy is built and maintained in a manner that is reliable, predictable and comprehensible for all parties. Among other things, a cryptocurrency needs to have, in order to qualify for inclusion in the index, sufficient market value, liquidity, security and reliable data feed from exchanges. Strategy is calculated with daily closing prices and circulating supply from coingecko.com.
Benefits and limitations
Kriptomat’s Equally Balanced Crypto Intelligent Strategy offers a unique approach to cryptocurrency investing, characterised by its own set of benefits and limitations. Understanding these can help investors determine how well this strategy aligns with their investment goals and risk profile.
Benefits:
- High-beta market exposure: This strategy is designed to provide investors with greater volatility potentially leading to higher returns in bullish market conditions.
- Balanced representation across market caps: By equally weighting assets, the strategy avoids the pitfalls of over-concentration in large-cap coins, thus providing a balanced representation across various market caps.
- Opportunities in small-cap growth: The equal allocation allows investors to capitalise on the growth potential of smaller-cap cryptocurrencies, which might be overlooked in market-cap-weighted strategies.
- Simplicity and clarity: The strategy’s straightforward approach of Equally Balanced Cryptoing makes it easy to understand and monitor for investors.
Limitations:
- Higher volatility: Given the Equally Balanced Crypto given to smaller-cap cryptocurrencies, the portfolio may experience higher volatility compared to strategies focusing predominantly on large-cap or more stable assets.
- Not suited for low-risk tolerance investors: Due to its higher volatility and exposure to a broader range of assets, this strategy might not be suitable for investors with a low risk tolerance.
While the Equally Balanced Crypto Intelligent Strategy offers an innovative way to engage with the crypto market, it’s crucial for investors to weigh its benefits against its limitations. This strategy is particularly appealing for those seeking diversified exposure across different market caps and who are comfortable with a higher degree of volatility in pursuit of potentially greater returns.
Current portfolio allocation (November 2023)
As of November 2023, here is the current allocation of Kriptomat’s Equally Balanced Crypto index:
| Cryptocurrency | Allocation (%) |
|---|---|
| Bitcoin (BTC) | 10% |
| Binance Coin (BNB) | 10% |
| XRP (XRP) | 10% |
| Cardano (ADA) | 10% |
| Dogecoin (DOGE) | 10% |
| Solana (SOL) | 10% |
| Polygon (MATIC) | 10% |
| TRON (TRON) | 10% |
| Litecoin (LTC) | 10% |
| Ethereum (ETH) | 10% |
This portfolio allocation excludes stablecoins and is subject to monthly revisions, adapting to the ever-changing landscape of the cryptocurrency market.
Strategy performance
Kriptomat’s Equally Balanced Crypto strategy has shown remarkable performance, significantly outperforming Bitcoin. As of the latest data up to November 2023, the results are as follows:
- 6 Months: +29.93%
- 1 Year: +62.07%
- 3 Years: +1986.17%
- 5 Years: +5261.23%
These figures demonstrate the strategy’s exceptional ability to capitalise on the broader crypto market’s movements, achieving substantial returns over various time frames. Its success underscores the effectiveness of a balanced investment approach across a diverse range of cryptocurrencies. However, it’s important to remember that past performance is not indicative of future results, especially in the volatile cryptocurrency market where historical trends do not always predict future movements.
Who is this strategy for?
Kriptomat’s Equally Balanced Crypto strategy is specifically tailored for a certain type of investor, characterised by their risk tolerance and return expectations. This strategy is ideal for:
- Investors with higher risk tolerance: The strategy’s inherent higher volatility makes it suitable for investors who are comfortable with and can afford a higher level of risk. These individuals are typically seeking more aggressive growth opportunities and are prepared to weather the potential short-term price fluctuations for potential long-term gains.
- Those seeking higher return expectations: Given its exposure to a broader range of market caps, including smaller and potentially faster-growing cryptocurrencies, this strategy aligns well with investors who have higher return expectations and are looking for opportunities beyond the large-cap assets.
- Experienced crypto investors: The strategy is also fitting for those who already have a solid understanding of the cryptocurrency market and its dynamics. Experienced investors who can navigate the complexities and understand the implications of market movements will find this strategy to be a valuable addition to their investment approach.
- Diversification seekers: Investors aiming to diversify their portfolio across a variety of cryptocurrencies, rather than concentrating their investment in a few large-cap coins, will find this strategy appealing. It provides a systematic approach to ensuring wide exposure across the crypto market.
- Long-term investors: Despite its higher risk and volatility, this strategy can be suitable for long-term investors who understand and believe in the growth potential of the cryptocurrency market as a whole, and are looking for an investment approach that could potentially yield higher returns over an extended period.
In summary, Kriptomat’s Equally Balanced Crypto strategy is designed for investors who are well-versed in the crypto market, are comfortable with higher risk levels, and are in pursuit of potentially higher returns through a diversified and balanced exposure to a range of cryptocurrency assets.
Uncover the steps to begin investing with Kriptomat’s Equally Balanced Crypto strategy in our extensive guide “Kriptomat’s Byte-Sized Guide to Intelligent Portfolios: Navigating the Future of Crypto Investments”.
Zooming out
Kriptomat’s Equally Balanced Crypto Intelligent Strategy provides a balanced, dynamic approach to cryptocurrency investing. It evenly spreads investments across different market caps, blending the growth potential of smaller-cap cryptos with the stability of larger ones. This strategy suits investors seeking a higher risk-reward ratio and an alternative to traditional market-cap-weighted approaches.
For those ready to embrace the dynamic nature of the crypto market with an innovative and balanced approach, Kriptomat’s Equally Balanced Crypto Intelligent Strategy offers a structured pathway to explore diverse cryptocurrency investments. Sign up for a Kriptomat account and step into the future of investing with our Intelligent Portfolios.
Further reading
We invite you to learn more about Kriptomat’s Intelligent Portfolios and discover other strategies in the following articles:
- Invest Smarter: How to Optimise Your Crypto Assets with Kriptomat’s Intelligent Portfolios
- Unlock DeFi Potential Through Kriptomat’s Intelligent Portfolios
- Leverage the Power of Smart Contracts with Kriptomat’s Intelligent Portfolios
- Profit from Momentum with Intelligent Portfolios: Inside Kriptomat’s Capture Movers Strategy
- Measured Moves: Guide to Kriptomat’s Risk Adjusted Strategy for Intelligent Portfolios
- The Big Ten: Kriptomat’s Intelligent Portfolio Strategy for Top Market Cap Cryptocurrencies
NOTE
This text is informative in nature and should not be considered an investment recommendation. It does not express the personal opinion of the author or service. Any investment or trading is risky, and past returns are not a guarantee of future returns. Risk only assets that you are willing to lose.
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