Crypto Briefing’s CB10 index gives way to ETH, ADA
Key points to remember
- Crypto Briefing’s CB10 June rebalancing was done at 10:00 a.m. EST on June 1.
- Cardano, Dogecoin and Ethereum were the best performers in the index last month.
- Polygon’s MATIC replaced Solana with an allocation of 0.99%.
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Crypto Briefing’s CB10 index of the top ten market-capitalization-weighted cryptocurrencies generated a negative return of 27.6% in May.
CB10 May Performance
Crypto Briefing’s CB10 index went through the turbulent May period with higher gains than Bitcoin. While Bitcoin recorded a monthly loss of 35.5%, CB10 fell 27.6%.
The index borrows from the principles of the S&P 500 to distribute funds based on their market capitalization. The distribution allows for lower volatility for the CB10 and a better risk / reward ratio.
Cardano’s native ADA token performed the best among CB10 tokens last month. While most tokens ended May in the red, the monthly ADA gain was 28.5%. The anticipation of an upgrade to bring smart contracts to Cardano fared well for its price.
DOGE and ETH contained their monthly losses to 6.5% and 10.5% respectively. Chain statistics, the strengthening of the DeFi narrative and growing institutional interest have all fueled extremely optimistic feelings for ETH in recent months.
Additionally, the community engagement around Dogecoin has been very active, helped in part by Elon Musk’s promises to improve the source code and the occasional promotional tweets. DOGE was among the top performers in the crash last month.
Monthly losses in Bitcoin and many other cryptocurrencies were over 30%.
Bitcoin Dominance Slides
The most notable trend in May was the sharp correction in the crypto markets, starting on May 12. In addition to the decline in Bitcoin, many DeFi tokens and small cap coins suffered losses of 50% or more after the market crash on May 19.
Bitcoin’s market cap dominance fell below 50% for the first time since 2018. OOn May 19, there was a brief rise in dominance. Nonetheless, rotation to Bitcoin was limited after the crash. Currently, BTC owns 40.2% of the $ 1.73 trillion crypto market cap.
Ethereum’s share of the crypto market has grown to 18.1% with a total market value of $ 313 billion.
The portfolio rebalancing was completed at 10:00 a.m. EST on June 1, 2021.
The composition of the index has mainly changed for the four major cryptocurrencies. Once again, Ethereum took a significant share of Bitcoin’s share in the index.
Bitcoin’s percentage weight increased from 64.69% to 58.52%, while ETH, DOGE and ADA saw their allocations increase by 3.98%, 0.41% and 2.08 % respectively.
Polygon’s MATIC made its first entry in the index, replacing SOL in the tenth position. Its share at the time of the index rebalancing was 0.99%.
Investors can sell their tokens for a stablecoin or a Bitcoin and redeem the newly allocated amounts to rebalance the index. Details of the process are listed in the portfolio’s first rebalance in February.
Finally, it should be noted that the compound strategy may not appeal to all readers.
Indices based on strategies such as distribution by market capitalization or by segment are effective supports for passive investors. They improve the risk-return ratio through diversification. However, investors must also have an exit strategy for their investments. They can choose between recording profits every month (or even every quarter) or continuing to accumulate the earnings.
For example, if investors who started with $ 1,000 in January had withdrawn their gains on rebalancing each month, they would have added $ 800 in the first four months. Considering May’s 27.5% loss, the total profit in five months is $ 525. The compounded return figure for the same period is $ 493. So while the mix generates superior returns during positive trends, it may not be suitable for volatile markets.
For experimental purposes, Crypto Briefing will continue to follow the compound strategy. Find Live Portfolio Statistics here.
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