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The tools of the classical market are also used when investing in digital assets. Experts proposed options for strategies for the distribution of risks from conservative to risky
In the digital asset market, it is possible to increase capital through investment. But if you do not follow a well-thought-out strategy and make impulsive decisions, you can incur losses. Experts of RBC-Crypto spoke about the options for compiling a crypto portfolio in the current market conditions.
There are no safe haven assets in the cryptocurrency market, where investors can sit out difficult times: during corrections, absolutely all coins fly down, said Chen Limin, CFO and head of the trading operations department at ICB Fund. He explained that in the stock market, investors can close positions on growth stocks and purchase securities, for example, representatives of the energy sector. And in the crypto market, they have to completely close positions and go into cash.
The expert believes that the only correct option during the correction will be 100% allocation in stablecoins. Nevertheless, he suggested that if a person is just starting to gain a portfolio of cheaper assets, then as a conservative option, you can specify the placement of funds in two assets in which market participants are really sure – BTC and ETH.
The head of the analytical department of AMarkets Artem Deev agreed that the conservative portfolio provides for fully defensive assets, which, among cryptocurrencies, can currently only be bitcoin and Ethereum: they still have the possibility of growth in the long term.
According to the expert, the portfolio of a crypto investor during a crisis is not much different from the portfolio that a person trading in the stock market has.
“The principle always works the same way: in a period of turbulence and uncertainty (not to mention pessimistic sentiment in the market), reduce risk, go to defensive assets as much as possible. This is exactly how a crypto investor should act, “says Deev.
During the fall in the capitalization of the crypto market, portfolio investment in the CFA market is a big challenge for the investor, says Viktor Pershikov, a leading analyst at 8848 Invest. In his opinion, without hedging instruments, such as futures and options on digital assets, the result will be negative against the background of falling quotations.
“The high correlation of crypto assets does not allow to qualitatively diversify the portfolio in order to minimize risks. This makes classic portfolio investment in the period of decline in cryptocurrencies unprofitable, “the expert says.
Pershikov explained that a conservative portfolio could roughly consist of the most capitalized cryptocurrencies, such as BTC and ETH, by 30%, stablecoins by 40%, and futures (hedging) would take about 30%.
A more risky option is a portfolio of Bitcoin and Ethereum plus other top infrastructure projects, for example: Solana, Avalanche, Near, Harmony, admitted the financial director of ICB Fund Chen Limin. He noted that the example of Terra does not allow to call the purchase of tokens even large projects a low-risk occupation.
“Nevertheless, there is an opportunity to earn about 600% by purchasing these tokens at a discount, if the coins simply recover to their peak values from current marks. But you should be prepared that they can fall in price by at least another 50%,” the expert warned.
A moderate portfolio is one where defensive and risky assets are relatively balanced, according to Artem Deev, head of the analytical department of AMarkets. As an example, he cites a portfolio where 50% are various “meme” assets, and another 50% of the portfolio is Bitcoin and Ethereum.
According to Viktor Pershikov, a leading analyst at 8848 Invest, a moderate portfolio, as well as a conservative one, includes not only a set of cryptocurrencies, but also elements of hedging. For example, allocation in stablecoins and derivatives: mainly in short futures and put options.
Pershikov added that this approach requires the ability to use a wide range of crypto market tools, in addition to the banal purchase of digital assets. The expert is of the opinion that during periods of falling prices, it is precisely such components that can ensure the absence of drawdowns in management, primarily due to hedging.
According to the analyst, the approximate composition of a moderate portfolio can be as follows: the share of cryptocurrencies from the TOP-10 assets by capitalization accounts for 40%, for stablecoins – 30% and for futures (margin trading and hedging) also 30%.
The cycles of the CFA market unequivocally indicate that any decline represents an excellent opportunity to enter the market, Pershikov said. He believes that even in the period of falling prices, it makes sense to be in certain crypto assets.
“You can at least count on a rebound of the market within the framework of medium-term investment, and as a maximum on the formation of the bottom and further upward movement, as it usually happens in the cryptocurrency market,” the expert explained.
The composition of an aggressive portfolio can consist of 50% of cryptocurrencies included in the TOP-30 of the market, 20% of stablecoins, and the remaining 30% are futures (margin trading and hedging).
The risk portfolio now can be called the one where most of the funds are invested in the newly appeared coins, DeFi and NFT, says Artem Deev, head of the analytical department of AMarkets. He is of the opinion that the period of rapid growth of these assets is clearly over, and the prospects are extremely vague. According to the expert, most likely, the coins that showed records of value growth will fall no less rapidly further.
CFO of ICB Fund Chen Limin pointed out that very few projects from the top by capitalization for 2017 were able to survive the subsequent bear market. Therefore, it is not worth experimenting with the long-term purchase of DeFi tokens and meta/game projects, the expert believes.
The chances of surviving such projects are initially quite low, so interacting with players who are not able to support the demand for coins for a long time can end “quite sadly,” Limin admitted. In his opinion, it makes sense to increase the overall profitability of the portfolio by participating in the initial coin offering rounds.
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