--- title: State of Crypto --- ## 21Shares Publishes its Latest **State of Crypto.** This report provides an in-depth overview of the state of the crypto asset industry over the last few months — offering our view on the industry and a recap of the most important news items. In addition, we have included one of our research reports: **Our insights into Portfolio Allocation, The Case for Crypto assets.** ![mediamodifier\_image](https://connect.21shares.com/hubfs/mediamodifier_image.png) ## State of Crypto Content ## What's inside? ### **Market Updates** The Russo-Ukrainian war led to the downturn of all walks of capital markets, except for commodities. The macro factors that came with the first quarter of 2022 also caught the realm of decentralized finance (DeFi) off guard, hitting the second generation of decentralized applications (dApps) the most, and lending protocols the least. ### **Correlation and Returns Across Asset Classes** When one considers investing in a given asset class, two primary questions should be asked: What is the investment thesis for this asset class? What proportion of my portfolio should be allocated to this asset class given my current financial goals and constraints? ### **Rebalancing** Rebalancing is critical for portfolio construction to smooth out drawdowns across major asset classes — especially for crypto assets including BTC and Ethereum or a basket, and harvest the long-term premium with diversification benefits. We combined modern portfolio allocation with on-chain indicators to build a dynamic rebalancing strategy and improve performance. ### **Asset Allocation Simulation** In this section, the research will explore the sweet spot of bitcoin allocation depending on investors’ levels of risk tolerance (conservative, moderate, growth, and aggressive) and investment goals (maximize Sharpe ratio, Sortino ratio, and Sharpe ratio with a 5% tracking error threshold). ### **Diversification within Crypto assets** Evidence suggests that additional crypto assets – with slightly different value and risk drivers to bitcoin – would offer further diversification benefits.  ### **Dynamic Allocation with Blockchain Indicators** Transparency of public blockchains has proven beneficial to gauging investor sentiment; though transactions are pseudonymous, timestamps and transaction values are visible and humanly readable.  ## Crypto Made Easy. 21Shares takes innovation to the next level with the largest suite of cryptocurrency exchange-traded products (ETPs) in the world. In 2018 it pioneered the world’s first cryptocurrency index listing on the SIX Swiss Exchange, and it continues powering its cryptocurrency franchise with cutting-edge research and groundbreaking approaches to product strategy. 21Shares aims to provide all investors with an easy, secure, and regulated way to buy, sell, and short cryptocurrency through existing bank and brokerage accounts. [![Learn More](https://hubspot-no-cache-eu1-prod.s3.amazonaws.com/cta/default/5994002/78f7dc64-10dd-4b3e-b872-6b693391a5df.png)](https://hubspot-cta-redirect-eu1-prod.s3.amazonaws.com/cta/redirect/5994002/78f7dc64-10dd-4b3e-b872-6b693391a5df) [![Video Mockup](https://connect.21shares.com/hubfs/Video%20Mockup.png)](https://www.youtube.com/watch?v=Fzajvz49nDQ) ## State of Crypto **Issue #6** #### ELEGANTLY CRAFTED IN SWITZERLAND [![21Shares Logo](https://cdn.21shares.com/img/system/logo-footer.svg)](https://connect.21shares.com/?hsLang=en) - [PROSPECTUS](https://21shares.com/ir/prospectus?hsLang=en) - [Final terms](https://21shares.com/ir/final-terms?hsLang=en) - [Key Information Documents](https://21shares.com/ir/kids?hsLang=en) - [EMT Download](https://cdn.21shares.com/uploads/current-documents/V3EMT%20V9_2022_01_19.xlsx) # General Disclaimers This website does not constitute an offer of services or securities by 21Shares AG, or its affiliates (collectively “21Shares”). All information provided by 21Shares is impersonal and not tailored to the needs of any person, entity or group of persons. It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments based on that index. 21Shares makes no assurance that investment products based on the index will accurately track index performance or provide positive investment returns. 21Shares is not an investment advisor and makes no representation regarding the advisability of investing in any such investment product or other investment vehicle. A decision to invest in any such investment product or other investment vehicle should not be made in reliance on any of the statements set forth on this website. Prospective investors are advised to make an investment in any such product or other vehicle only after carefully considering the risks associated with investing in such products, as detailed in an offering memorandum or similar document that is prepared by or on behalf of the issuer of the investment product or other investment product or vehicle. 21Shares is not a tax advisor. A tax advisor should be consulted to evaluate the impact and consequences of making any particular investment decision. Inclusion of any assets within an index is not a recommendation by 21Shares to buy, sell, or hold such security, nor is it considered to be investment advice. The website materials have been prepared solely for informational purposes based upon information generally available to the public and from sources believed to be reliable. No content contained in these materials (including index data, ratings, credit-related analyses and data, research, valuations, model, software or other application or output therefrom) or any part thereof (“Content”) may be modified, reverse-engineered, reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of 21Shares. The Content shall not be used for any unlawful or unauthorized purposes. 21Shares does not guarantee the accuracy, completeness, timeliness or availability of the Content. 21Shares is not responsible for any errors or omissions, regardless of the cause, for the results obtained from the use of the content. 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The calculated prices may not be achieved by investors as the calculated price is based on prices from different trading platforms. Furthermore, an investment into crypto currencies and/or digital assets may become illiquid depending on the trading platform or investment product used for the specific investment. Investors should carefully review all risk factors disclosed by the relevant trading platform or in the product documents of relevant investment products. 21Shares AG, Pelikanstrasse 37, 8001 Switzerland ## Performance Disclaimers Charts and graphs are provided for illustrative purposes. Past performance is not an indication or guarantee of future results. The charts and graphs may reflect hypothetical historical performance. All information presented prior to the launch date is back-tested. Back-tested performance is not actual performance but is hypothetical. 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