The smart way to invest in cryptocurrencies

Diversify your crypto holdings by investing in a crypto ‘bundle’.
Revix’s unit trust-like 'bundles' mean you can own the 10 largest cryptocurrencies in one investment. Image: Chris Ratcliffe, Bloomberg

Since bitcoin’s launch in 2009, the largest cryptocurrency’s price has appreciated at a compound 200% a year, making it the best investment of the last decade.

With that sometimes comes extreme volatility – though bitcoin’s volatility is noticeably lower than was the case in 2017 when it hit its previous all-time high of $20 000.

Today bitcoin has become the benchmark against which other smaller cryptocurrencies are measured. There are more than 4 500 cryptocurrencies as of March 2021, up from just a handful in 2013. This shows the amount of development and energy being ploughed into this new technology built around the blockchain, allowing for transactions to occur and be permanently recorded without an intermediary or centralised database.

The problem faced by newcomers to cryptos is where to start, given the number from which to choose.

Revix has solved that problem by creating unit trust-like ‘bundles’ that spread your investment over the biggest and most successful cryptos.

The fintech is backed by JSE-listed financial services group Sabvest and has been operating since 2018 in the South African market.

For example, Revix’s Top 10 Bundle is invested equally across the 10 largest cryptos, as measured by market value. This takes the guesswork out of trying to pick the next big winner in the crypto market since you own the 10 largest cryptocurrencies. The crypto ‘bundle’ is automatically rebalanced each month to ensure the investment is weighted 10% in each of the top 10 largest cryptos.

What is a rebalance?

Revix’s monthly rebalancing is performed by proprietary algorithms. This is a fully automated process that buys and sells cryptocurrencies on your behalf based on predefined rules. This process ensures that your crypto portfolio stays up to date with the fast-paced market. Every month the Revix team performs a comprehensive review of all significant cryptocurrencies within their bundles. As part of this process, they reevaluate all major cryptocurrencies’ potential risks and programmatically recalculate market cap rankings to ensure the bundles capture the most highly valued projects on the market.

Performance

Had you invested in the Top 10 Bundle over the last 12 months, you would have seen a gain of 878%, against an already astonishing 627% had you simply bought and held bitcoin.

These returns are so staggering that many people believe they have missed the boat and that it is too late to invest, but history suggests this is not the case.

“When looking at past performance data, we see that each time cryptocurrencies like Bitcoin and Ethereum hit a new high, they go through a period of consolidation before hitting yet a new high. This has been the story of cryptocurrencies over the last decade,” says Sean Sanders, CEO and founder of Revix.

As value investor Bill Milner noted, bitcoin “gets less risky the higher it goes” because it is still early in the adoption cycle. That’s the opposite of what happens with most stocks.

Adds Sanders: “While there are always sceptics to a new technology and an investment category that has produced eye-watering returns, one thing has become ever clear over the years: cryptocurrencies are here to stay in an increasingly digitised world.

“Blockchain technology is one of the asset classes paving the way into the fourth industrial revolution (4IR). It has allowed people to build decentralised applications, with a multitude of use cases such as peer-to-peer financial transfers without an intermediary.”

The source of returns

Over the past five years, cryptocurrency market capitalisation has grown from $19.6 billion to over $1.6 trillion: 8 461% growth. Of this, bitcoin makes up just over $1 trillion, making it larger than the three biggest banks in the world combined, including JP Morgan Chase, Bank of America and the Industrial and Commercial Bank of China.

Source: Revix

Although bitcoin grabs all the headlines, it is the alternative coins (or altcoins, which are all cryptocurrencies that are not bitcoin) that have been amassing even more impressive returns.

If we exclude bitcoin, the altcoin market has seen growth of 40 681% over the past five years, which amounts to compound annual growth of 233% a year. This growth is partly due to the rise in decentralised finance (DeFi). DeFi is a subsector of the cryptocurrency industry where entrepreneurs are building semi-automated trading and lending systems atop blockchain networks.

A closer look

The chart below shows the remarkable returns of altcoins like Cardano (up more than 5 000%) over 12 months, Binance Coin (2 490%) and Chainlink (1 486%). Each of these has different use cases. Cardano is building a robust blockchain on which to host a new financial architecture to compete with Ethereum, while Binance Coin is a cryptocurrency that fuels the Binance Smart Chain, a ‘centralised’ blockchain owned by crypto exchange Binance that is competing with others to become the dominant player in this fast-developing space.

Source: Revix

With this growth, the total number of cryptocurrencies in existence has increased to over 4 500. To put that into perspective, there are only 335 listed stocks on the JSE, and that number is steadily decreasing. This vast number of options makes it increasingly more difficult for investors to scan the investable universe for winners.

How do I pick a winner?

At a glance, the cryptocurrency market can be an overwhelming place, especially for those who are not well versed in it.

Much like the internet bubble of 1990-2000, thousands of blockchain-based projects are being developed. This makes it near impossible to pick the next Amazon or Google of the cryptocurrency world, and tougher yet to hold on to them for a sustained period.

The best way to gain exposure to this asset class is through a well-diversified bundle that tracks the largest and most trustworthy cryptocurrency projects, with sustained long-term growth potential.

Owning a basket of the Top 10 cryptocurrencies, which currently accounts for 91% of the total cryptocurrency market capitalisation, is a superior way to invest over the long-term in this asset class.

Sanders explains: “Buying bitcoin is great. But you know what’s better? Buying the next bitcoin.

“Smart investors know that being early is critical to success, and investing in cutting-edge crypto assets before they hit mainstream media headlines has been a winning strategy,” says Sanders.

“With our crypto bundles you own an equally-weighted basket of the world’s largest and by default most successful cryptocurrencies. You don’t have to try guess which up-and-coming cryptocurrencies will become the next bitcoin since you’ll own a diversified basket of cryptos that gets automatically updated every month based on how the crypto market has performed.”

The crypto market changes quickly

Over the past five years, only four cryptocurrencies have managed to stay in the top 10 (bitcoin, Ethereum, XRP and Litecoin) and only one was able to significantly grow its market share (Ethereum, which grew its market share from 8.95% to 13.96%).

Source: Revix

“We set out to solve this problem of not having to guess which cryptos will be the big winners,” says Sanders.

“The best way to ensure that you own the biggest success stories is to own a basket that dynamically and automatically updates with the market’s changes. This is easily accomplished by investing in the Revix Top 10 Bundle. We rebalance the basket of cryptocurrencies each month so that new cryptos that are on the way up will displace ones that are losing ground and knock them out of the Top 10 Bundle.

“This explains why the Top 10 Bundle delivered superior returns to a direct investment in bitcoin over the last year – because there were several smaller cryptocurrencies that outperformed bitcoin.”

Other ways to intelligently invest in cryptocurrencies

Revix offers another two crypto bundles focused on specific investment themes:

Its Smart Contract Bundle tracks those cryptocurrencies that enable smart contract functionality and include several cryptocurrencies that are looking to challenge Ethereum’s smart contract dominance. Smart contracts use the blockchain to allow peer-to-peer transactions without the need for third party verification. This bundle comprises cryptocurrencies that enable developers to build applications on top of their blockchains, much like how developers build mobile apps on top of the Apple mobile iOS operating system. The cryptos in this bundle include Ethereum, Cardano, Tron, Neo, and EOS.

Revix also offers a Payment Bundle, which provides exposure to the largest five payment-focused cryptocurrencies looking to compete with government-issued fiat currencies to make digital payments cheaper, faster and more global. These cryptos include Bitcoin (BTC), Ripple (XRP), Litecoin (LTC), Bitcoin Cash (BCH) and Stellar (XLM).

You can also buy and sell USDC (a ‘stablecoin’ fully-backed by the US dollar) and a physical gold-backed token called PAX gold which provides legal ownership of an ounce of gold through Revix’s online platform.

Brought to you by Revix.

For more information, visit Revix.

This article is intended for informational purposes only. The views expressed are not and should not be construed as investment advice or recommendations. This article is not an offer, nor the solicitation of an offer, to buy or sell any of the assets or securities mentioned herein. You should not invest more than you can afford to lose, and before investing please take into consideration your level of experience and investment objectives, and seek independent financial advice if necessary.

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