Most investors have equity and fixed income exposure, some investors have real estate, commodity and various other flavors of risk in their portfolio. A small minority of investors (less than 2%) are participating in the crypto economy, and these investors are being rewarded generously for the risk they are taking as early adopters.
The entire crypto market is smaller than $620b at this moment, a drop in the bucket compared to the $22 trillion in the S&P 500, $8 trillion in gold, and $900 billion in Apple alone’s market cap. As the asset class gets larger it’s not hard to believe that more investors and advisors will seek the diversification benefits and outsized returns of this new highly uncorrelated asset. If history is an indicator, as new participants come into an asset, the volatility is muted and the returns become more evenly distributed. This then leads to more participants, and less volatility. The cycle is repeated until we have a global asset class, capable of servicing even the most risk averse investor.
If we agree that digital assets are here to stay, what then is the best way to capitalize on this budding ecosystem? I’m often asked what the next Bitcoin is, or which platform is going to be the Ethereum killer. Be wary of those who answer this question for you with certainty…
The fact is my opinion does not matter. Neither does the opinion of any of the so-called experts in the crypto space. In such a fragmented and irrational market, logic drives very little of the returns. Coin speculators who attempt to generate alpha, are often left wondering why their best ideas and “tips” haven’t worked. Ask yourself an honest question: “Am I a trader? Or an investor?”
The most promising protocols are not always the highest performing, especially not in the very short term. There is a reason behind the persistent exodus from active to passive managers in the traditional equities world. Passive index funds have almost always outperformed active management and day trading strategies. We just need the right passive financial products to turn this industry upside down.
Crescent Crypto is launching a suite of passive index vehicles to capture crypto returns and package them for the investor seeking broad exposure to the asset class, without having to pick the ultimate winner. Some investors buy Apple, some investors buy SPY. Crescent is doing for cryptocurrencies what SPY did for US equities.
About the Author
Ali Hassan is an investor and entrepreneur. He founded Crescent Crypto Asset Management to fill the demand for an institutional quality passive investment vehicle in the cryptocurrency market.
Prior to Crescent Crypto Ali was a Research Associate at Granger Management, a NY based family office, and was responsible for research and due-diligence on VC opportunities. Prior to that, Ali was a venture analyst at Fairview Capital Partners, and a member of the investment team. He focused on deal sourcing, due diligence, valuations, and investment monitoring for Fairview’s venture capital, and co-investment portfolios.