Development of the BTC ECHO model portfolio Conservative KW 44
In this series, one of the portfolios from the cryptocompass is to be presented and tracked. The "conservative portfolio" is composed of older cryptocurrencies such as Bitcoin, Ethereum or Ripple. Compared to the top 3, this portfolio has performed well in recent weeks.
We are approaching the end of the year and have to state: Until now, the bear market is continuing. Does it really make sense to invest? In addition to the typical scene-internal statements such as BTFD (by the fuckin dip) and HODL (hold on for dear life) one can undoubtedly recommend things like Dollar Cost Averaging and Mayer Multiple. But should one distribute his investment in different crypto currencies?
The Capital Asset Pricing Model or CAPM can answer this question. In classical portfolio management, CAPM is considered to be a theoretically sound capital market model that describes the relationship between systematic risk and the expected return on assets. The CAPM is due to the model of Markowitz from 1952. This was later further developed by Sharpe, Lintner and Mossin to the now well-known CAPM. It is neither a fundamental nor a technical analysis of individual values, but the consideration of portfolios consisting of several positions.
Exclusive in the cryptocompass: Presentation of three portfolios
In the cryptocompass, we have been tracking the progress of three portfolios for several months and are optimizing these based on the CAPM model. We call them conservative, medium and risk.
Conservative is a sample portfolio, which is relatively low risk. It's made up of older cryptocurrencies like Bitcoin or Ethereum. In addition, a stable coin or cash position is established. The portfolio medium consists of various newer crypto currencies such as Cardano or EOS. Finally, the portfolio risk largely consists of ERC20 tokens, which are quite young.
To avoid fiscal complications, we avoid rebalancing and only change the weighting of the portfolio through a monthly reinvestment. So let's look at a mix of CAPM and Dollar Cost Averaging.
We would like to regularly monitor the development of the Conservative portfolio.
Without going into too much detail, the Conservative portfolio consists of the following positions (ranked from the strongest to the weakest): Tether, another stable coin or cash position, Omnilayer Protocol, Counterparty, Ethereum, Bitcoin, Dash, Siacoin , Monero and Ripple.
The Conservative Portfolio: Now viewed every week
In order to follow the performance of the model portfolio discussed in more detail in the Crypto Compass, we would like to look at the percentage return development of our model portfolio on a weekly basis. As a benchmark, we look at the development of the three largest crypto currencies. In addition, we consider a model portfolio composed of the top 10 with weightings proportional to the respective market capitalization.
A comparison with the three largest cryptocurrencies shows that this portfolio outperformed Ethereum (red) or XRP (dark green), despite the rallies on XRP and Ethereum since the end of October. Only Bitcoin itself and the comparison portfolio consisting of the top 10 were able to stand up to the conservative portfolio:
A look at various key figures confirms this first impression:
|Return in percent||Volatility in percent||Value at Risk, p = 95%||Value at Risk, p = 99%|
Admittedly, the yield on the model portfolio Conservative was slightly lower than in the case of Bitcoin or in the comparison portfolio. A look at the value at risk shows that investing in the model portfolio was the safest of all investments considered. At 99%, the Conservative portfolio had no greater losses than 5.72%. This risked less capital than the top 10 benchmark portfolio (10.51 percent) or Bitcoin itself (6.47 percent).
- Portfolio_KW45: CriptomonedaseICO
- managed-portfolio_745934506: Shutterstock
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