Analysing performance of digital assets: BNB-based allocation trumps Bitcoin-based portfolio

Portfolio Management in the digital asset industry has picked up pace in the financial industry over the past couple of years.

A recent collaborative report between 21Shares and Binance Research identified the performance of traditional US equity and fixed-income portfolios, with and without the involvement of digital assets.

According to the report, portfolio optimization with BNB was also a major point of discussion.

The characteristics of BNB were highlighted in the report as it was one of the lowest correlated assets with other digital assets and it also incurred a low correlation index with traditional financial assets in 2019.

The report went forward with two general approaches for the construction of the portfolio: Results based Time-Rebalancing and those based on Tolerance-based Rebalancing. With regard to the former, it was reported that Binance token portfolio indicated a high level of volatility in comparison to the BTC+BNB portfolio but the excessive volatility was largely compensated because BNB outperformed both the benchmark portfolio with crypto and the BNB+BTC portfolio.

When one looks at the tolerance rebalancing approach, one finds that the BNB portfolio performed better in this regard as well with both the benchmark and the BNB+BTC portfolios playing second fiddle in terms of profit returns.

The report added that the analysis suggested a tolerance-rebalancing strategy exhibited a more reliable way for an investor to ensure their portfolios are never unnecessarily over-exposed to the crypto-asset industry.

A report by Bitwise Asset Management earlier this year stated that more than half of the financial advisors suggested against cryptocurrency investments. A survey was conducted within 415 top financial advisors in the United States and even though they admitted that 90% of their clients had queried about crypto investments in 2019, the advisors strictly remained against the investment and believed that regulatory uncertainty was a major red flag in this decision.


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