How to Capitalise on Crypto’s Drawdown
- By Sam van de Schootbrugge
- 8 min read
Summary
- A new Man Group paper gives an investor’s guide to the cryptocurrency space, comparing popular valuation methods and trading strategies.
- It finds volatility-targeting methods effectively control risk, and trend-following strategies help maximise return.
- From an asset allocation perspective, investors should recognise the high correlation between equities and crypto during drawdowns.
Introduction
Crypto markets have suffered considerably over the last six months. For the optimistic investor, however, bitcoin’s current price offers the opportunity to enter the market at the same level as that of late 2020. So, if you feel you missed out before, this bear market may have given you a second (or third?) bite of the cherry.
Accordingly, a new Man Group paper provides an overview of what has and has not worked for crypto investors since 2017. From valuation tools to the best trading strategies, the authors ‘provide an investor’s perspective on how to approach the space’. So, in this Deep Dive, we summarise their findings.
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