• Alex Botte of Runa Digital Assets explains why crypto isn’t ready for passive investing — the returns of simple, market-cap weighted portfolios have underperformed bitcoin (BTC) over most calendar years and over a multiyear, full-market cycle.
• Historical analysis reveals that if a token falls out of the top 10 or top 100 rankings, it is very unlikely to re-enter — only 10% of tokens were able to re-enter.
• Active management is critical for success in the digital asset class due to its fat right tail in returns and low volatility nature.
Crypto Isn’t Ready for Passive Investing
Alex Botte of Runa Digital Assets explains why crypto isn’t ready for passive investing. According to historical analysis, the returns from simple, market-cap weighted portfolios have underperformed bitcoin (BTC) over most calendar years and over a multiyear, full-market cycle.
Risk Adjusted Performance
Bitcoin has also been one of the lowest volatility digital assets during this period which makes its outperformance even more impressive on a risk adjusted basis.
Reestablishing Position
Analyzing annual rankings of top digital assets by market cap reveals that if a token falls out of the top 10 or top 100 rankings; it is very unlikely to re-establish their position in either ranking — only 12 out of 115 tokens were able to re-enter.
Active Management Necessary
Due to its fat right tail in returns and low volatility nature; active management is critical for success in the digital asset class.