Different headwinds across the globe have seriously affected digital assets directly or indirectly. These includes everything from inflation concerns[1], EU anti-crypto amendments[2] to government bans[3]. Whatever the reason be, investors want to reduce their exposure to risky assets.
Want this, not that
This year, the price swings in January and February have led to investor perceptions swinging back, favoring large caps such as Bitcoin and Ethereum. A leading crypto asset manager, CoinShares[4], highlighted[5] this scenario in a 29 March report.
According to the report, investors tracked back into Bitcoin[6] (BTC) and Ethereum[7](ETH) while reducing exposure to altcoins. Alt tokens such as XRP[8] and smart contract-enabled blockchains Cardano (ADA[9]) and Polkadot (DOT[10]). This is evident in the graph below:
Source: CoinShares[11]
Nonetheless, a few altcoins did create headlines. Sentiment in Ethereum competitors such as Solana (SOL[12]), Avalanche (AVAX[13]), Cosmos (ATOM[14]) and Terra (LUNA[15]) has been rising. Diversification[16] of portfolios is the main reason why investors are considering such altcoins in their portfolios.
Source: CoinShares
However, it is also interesting to see investors are putting their money into cryptocurrencies as they see value in the new asset class.
All good and no bad?
Cryptocurrencies have enjoyed a significant amount of love and affection – that’s a fact. However, over the years, regulatory censures did create hiccups along the way. Investors reduced positions in digital assets with perceptions around politics.
Needless to say, government bans stood on the top of the list of critical risks.
The CoinShares survey revealed that the biggest risk in the eyes of
