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Bitwise CEO Hunter Horsley suggested that the era of cryptocurrency investment, which is mainly based on market capitalization, is over.
Horsley bets on a new era, similar to investing in companies on Wall Street.
Bitwise Cio Matt Hougan recently urged cryptocurrency investors to surpass Bitcoin.
For most people who want to dip their toes in the crypto market for the first time, the instinct over the years is to scan the list of top coins on aggregation platforms like CoinMarketCap and Coingecko and choose assets that seem to be consistent with them. However, as the market matures, this approach to cryptocurrency investment may end soon. drill CEO Hunter Horsley.
"I think the era of CoinMarketCap rankings for cryptocurrencies is coming to an end," Hosley said on Wednesday.
He will parallel similar to Wall Street, noting that investors have not selected companies by comparing market value.
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“Invest in Walmart? He asked verbally. “You won’t answer this question by looking for how they rank in S&P and market capitalization. You don't invest in ExxonMobil because it has a cheaper market capitalization than Eli Lilly & Co.. ”
Instead, investors, considering their position in the market and prospects, make choices by building papers around the business, Hosley said.
"I think this is cryptocurrency," he said. "These things are not exactly the same."
Indeed, with the emergence of new sectors in the market, the idea of narrative-driven investment has been growing in recent years, such as tokenization, gaming, middleware services and even AI projects.
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Last week, an investment manager Matt Hougan Advocate cryptocurrency investors to go beyond Bitcoin and diversify their portfolios in several verticals. He compared the cryptocurrency landscape with the internet in 2004.
Hougan noted that due to the dominance of search, many would be tempted to invest only in Google at the time, but added that while this would pay off, it wasn't the best strategy in hindsight.
"Google is doing well. Today, it's one of the most valuable assets in the world. But the other categories are doing well, and in fact, the best performer is Netflix. This wasn't noticeable in 2004."
Hogan said blockchain is a universal technology, like the Internet. He added that, therefore, it is difficult to predict which vertical industry will outperform the market in the next decade.
“History shows that you want to own a basket of crypto assets,” he said. “Don’t worry about picking the winner; investing in the big picture.”
Nevertheless, with thousands of projects available, it’s hard to blame most new investors for being overwhelmed and the risk tends to increase the smaller the project. Coingecko highlighted these risks, reporting in April that more than 50% of cryptocurrencies failed.
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"The Crypto era of CoinMarketCap rankings is nearing its end," said the paper-based investments initially appeared on Benzinga.com.