“Crypto-currencies exhibit a size effect like stocks”

From the perspective of an investor into the alternative asset class of crypto-currencies, we document that returns of crypto-currencies are weakly correlated both in their cross-section as well as with established assets, and thus interesting investments for diversifying portfolios. An investment strategy based on the CRypto-currency IndeX (CRIX) bears lower risk than any single of the most liquid crypto-currencies. Furthermore, we show that crypto-currencies exhibit a size effect like stocks.

Pretty good paper on cryptocurrency investment factors and price drivers [link]. Note, though, that the researchers seem to have some sort of relationship with the CRIX.

Size effect = smaller coins tend to perform better.

I haven’t published much lately, and that’s unlikely to change. Not even sure if I’ll continue the newsletter. I find myself losing interest in writing about and analyzing the space during such a secular – and some may say overheated – bull market. What advice can I give you, other than “don’t sell” (unless it’s small amounts of profit taking) and “don’t daytrade to excess”?

The long-term prospects of cryptocurrencies, cryptoassets, and token economies are brighter than ever. $1T is squarely within sight.

If you enjoyed this essay, here’s a list of the assets I own and the ones I’ve researched. Find me on Twitter and signup on the right to receive an update when I publish a new essay.

One thought on ““Crypto-currencies exhibit a size effect like stocks”

  1. jeff

    hi Kevin
    u have a great newsletter and hope you continue..Excellent sifting info in a sea of crypto confusion.

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