Ethereum (ETHUSD)

[ap17]

3 REASONS YOU NEED ETHEREUM 🧠
According to analysts, the Ethereum ETFs could launch by July 2nd.

That means investors need to be adding Ethereum to their portfolios now.

That's the latest takeaway out from Matt Hougan.

Matt Hougan
Matt Hougan is the Chief Investment Officer at Bitwise - the 4th largest Bitcoin ETF issuer.

In his latest investment memo, Hougan broke down 3 reasons why you should consider adding ETH to your portfolio.

Reason #1: Diversification

One of the first lessons every investor learns is to diversify.

Don’t own one stock; own a basket.

The same can be said about crypto.

It’s very hard to know exactly just how crypto will change the world, so the default approach should be to “own the market”.

Here’s how Matt explains it:

“Today, the market cap for ETH, the crypto asset that powers the Ethereum blockchain, is about $420 billion. That’s about one-third the size of Bitcoin’s $1.3 trillion. The starting place should therefore be about 75% Bitcoin and 25% ETH.”


Matt Hougan
Reason #2: Bitcoin and Ethereum Target Different Use Cases

Bitcoin & Ethereum are not the same.

Bitcoin is the best form of money that has ever existed.

On the other hand, Ethereum makes money programmable.

Two very different use cases.

By having both Bitcoin & Ethereum in your portfolio, you cover all your bases.

“Again, it is early in the crypto revolution. That makes it difficult to know exactly which applications will matter over the long term. Adding ETH to your Bitcoin simply gives you broader exposure to what public blockchains can do.”


Matt Hougan
Reason #3: Historical Analysis Says You Should

Historically, adding ETH to your portfolio has boosted both absolute and risk-adjusted returns compared to BTC only.

The table below looks at the impact a 5% allocation to crypto has had on a traditional portfolio of 60% stocks and 40% bonds over the past four years, using both a Bitcoin-only and a split 75% BTC / 25% ETH strategy.

chart
The table makes 2 points clear:

Allocating to crypto in general boosted both absolute and risk-adjusted returns

Adding ETH exposure resulted in even higher absolute and risk-adjusted returns

Matt explains:

“You even get a smaller maximum drawdown despite the higher overall returns, thanks to the benefits of diversification.”


Matt Hougan
We think the writing is on the wall - adding at least some Ethereum to your portfolio is a no-brainer. 🧠

Smaller drawdowns and bigger returns? Count us in.

However - one thing to note is that Bitcoin dipped following the launch of the Bitcoin ETFs.

It then rocketed to new all-time highs. 🚀

We wouldn’t be surprised to see Ethereum follow a similar pattern.