The development of Cryptocurrency markets is experiencing and exhibiting a quite tremendous growth. There are already more than 1000 cryptocurrencies and cryptoassets available on the market and new projects are being introduced and commissioned on a daily basis.
Year-to-date various startups raised over USD 1.3 bn through initial coin offerings. The lack of transparency in some projects, limited regulatory oversight and investor protection, and limited investor due diligence have created an environment, where some valuations are fueled by the fear of missing out rather than careful consideration of the project’s merits and market potential.
The return correlation between the crypto currencies used to be very high, but now investors are starting to differentiate between the assets and correlations are decreasing, implying the need for diversification.
Consistently picking “winners” has proven to be impossible in the long run, making the market wide diversification an optimal solution for an investor.