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.
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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.

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State of Crypto Issue #6

ELEGANTLY CRAFTED IN SWITZERLAND

General Disclaimers

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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. The back-test calculations are based on the same methodology that was in effect when the index(es) was officially launched. It is not possible to invest directly in any index. Prospective application of the methodology used to construct the index(es) as well as revisions to economic data may not result in performance commensurate with the back-test returns shown. The back-test period does not necessarily correspond to the entire available history of the index(es). Another limitation of using back-tested information is that the back-tested calculation is generally prepared with the benefit of hindsight. Back-tested data and/or information reflects the application of the index methodology and selection of index constituents in hindsight. No hypothetical record can completely account for the impact of financial risk in actual trading. For example, there are numerous factors related to the equities, fixed income, or commodities markets in general which cannot be, and have not been accounted for in the preparation of the index information set forth, all of which can affect actual performance. The index returns shown do not represent the results of actual trading of investable assets. MV Index Solutions GmbH and Invierno AB (Vinter) maintain the index(es) and calculate the index levels and performance shown or discussed but do not manage actual assets. Index returns do not reflect payment of any sales charges or fees an investor may pay to purchase the assets underlying the index(es) or investment funds that are intended to track the performance of the index(es). The imposition of these fees and charges would cause actual and back-tested performance to be lower than the index performance shown.