Key Points
- Bitwise CIO Matt Hougan encourages investors to diversify their crypto portfolio beyond Bitcoin.
- Some crypto indices and Ethereum outperformed Bitcoin over the past five trading days.
Bitwise CIO, Matt Hougan, has advocated for a diversified crypto portfolio, particularly after last week’s 37% Ethereum [ETH] pump sidelined several investors.
ETH experienced a 60% drop over the last four months, due to heightened FUD and overall headwinds related to the U.S.-China tariff war. This led some investors to shift to Bitcoin and other altcoins like Solana [SOL] and Ripple [XRP], and as a result, many were caught off guard by last week’s ETH pump.
Diversify Beyond Bitcoin
Hougan urged investors to consider options beyond Bitcoin. He stated, “Bitcoin is the king of crypto assets—the largest, most liquid, and most established. And yet I think most investors should own other crypto assets.” He drew parallels to the early internet boom in 2004, where Google dominated the search market, but other leaders in key verticals like Netflix also performed exceptionally well.
Hougan suggested that a similar scenario could unfold for blockchains, which he compared to general-purpose tech like the internet. He added that each network may offer different returns over time and that investors intrigued by the idea of nearly all the world’s assets moving onchain should consider owning a basket of crypto assets like Bitcoin, Ethereum, Solana, Chainlink, and more.
Indices Outperform Individual Equity Funds
The concept of a diversified crypto portfolio is the driving force behind crypto index ETFs. Hougan noted that individual equity funds have often lagged behind indices. His claim is supported by Google Finance data, which showed that compared to other crypto indices like Bitwise Crypto 10, Hashdex Crypto Index and S&P Crypto MegaCap Futures, Bitcoin rallied less than 1%. However, the crypto indices and Ethereum surged 13% over the same period. This suggests that Bitcoin investors could have gained an extra 13% or more if they diversified to other crypto assets via ETFs or directly.
