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.


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 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

State of Crypto Issue #6