Below is an analysis of a cryptocurrency portfolio from Cryptnation (Crypto101), a popular group with over 50,000 followers and various products across social media. This puts them in the micro to mid-tier range of influence. The portfolio is long-only and long-term, with some active management based on medium-term price changes. On average, it holds 9 assets (including cash) and is adjusted 8 times per year. This is a "core-and-adjust" strategy—holding positions for weeks to months and making periodic tactical rotations rather than frequent trades. For those unfamiliar, this is a fairly standard approach to crypto investing and reasonable for medium- to long-term horizons. This particular “Model Portfolio” is provided in a weekly newsletter and updated from time to time.
The visualization below shows the theoretical boundaries, their average, and a BTC buy-and-hold benchmark, given $1001 starting capital and assuming no position closures (profit-taking or stop-loss) beyond weekly published rotations.
From Jan 21, 2020 (portfolio inception) to Mar 9, 2021, readers were given options on possible coins to add to the portfolio. For example, as shown below, the first week gave users two separate choices: allocate 5% of capital to DASH or BAT and allocate 5% of capital to ZEN or KNC. Over time, each new weekly set of choices creates an exponential increase in the number of possible portfolios, which would be impossible to compute.
To mitigate this backtesting complication, we can use the benefit of hindsight and monitor just two portfolios.
For analytical purposes, I’m also including two more paths:
Orange shaded areas: Periods when BTC Hold outperformed the Oracle path.
| Path | Initial NAV | Final NAV | Return % | % of Oracle |
|---|---|---|---|---|
| Oracle (Max) | $1,001.00 | $11,242.73 | 1,023.15% | 100.0% |
| Average (Mean) | $1,001.00 | $6,782.32 | 577.55% | 60.3% |
| Anti-Oracle (Min) | $1,001.00 | $2,321.91 | 131.96% | 20.7% |
| BTC Hold | $1,001.00 | $10,542.92 | 953.24% | 93.8% |
Since its inception, the Oracle has outperformed a BTC buy-and-hold strategy. Though there are weeks this year, it is not the case.
Just having the highest return isn't always the best option. Most portfolio managers would prefer lower risk-adjusted returns.