Back in May 2020, investors in cryptocurrencies were seeing first-hand the risks involved in the market. However, at the time, BTCS (OTCQB: BTCS) was accruing value for its shareholders with well-timed cryptocurrency purchases that resulted in its cryptocurrency asset under management (AUM) growing to reach $1.02 million at the end of June 2020.
Given the volatility of cryptocurrency prices, investors need to take particular care when selecting a crypto company. Below are three important metrics that highlight the importance of investing with the right digital asset firm.
Strategic Portfolio Diversification
While BTCS reportedly plans to expand its digital asset portfolio, Bitcoin (BTC) and Ethereum (ETH) are currently the core components of the company’s portfolio. Both cryptocurrencies despite suffering significant declines in mid-March have staged massive recoveries.
The digital asset portfolio composition is an important consideration when selecting a suitable crypto firm. BTC is up almost 150% from its slump to $3,867 on Black Thursday — March 12, 2020 — while ETH appears to be on track to equal its 2020 price high. According to the Financial Times back in May, over-diversified investments were still struggling to recover from the COVID-19 market bloodbath.
By limiting its exposure to BTC and ETH, BTCS didn’t suffer the massive losses incurred by many other firms.
Some altcoins occasionally deliver massive earnings especially during “altseason.” However, historical precedence shows many tokens are unable to recover from massive downtrends in bear market declines. Including such tokens in a portfolio may open the possibility of huge losses when the market experiences a significant stressor event.
BTCS says its plan for portfolio diversification will follow a systematic evaluation of several altcoin tokens. The digital asset and blockchain firm also indicated it will stay away from ‘coins’ it believes may be deemed securities by regulators.
Navigating Market Uncertainties
Firms that were running high-risk portfolios saw a massive value depreciation amid the cascade of selloffs that occurred on Black Thursday. The speed and depth of the mid-March panic reportedly caught several digital asset firms off-guard.
BTCS strategy for Q1 2020 involved holding off from additional BTC and ETH purchases. Thus, when the crypto market slumped 50% in March, BTCS’ assets weren’t fully exposed.
In April the Tether (USDT) treasury embarked on an escalated USDT minting spree. Crypto-savvy investors believe that a Tether influx is a precursor for a bullish advance in Bitcoin price. Within Q2 2020, BTCS added 33.7 BTC and 1,319 ETH to its crypto portfolio.
Diversified Blockchain Exposure
Apart from holding positions in cryptos like Bitcoin and Ethereum, diversified exposure to blockchain technology is also becoming popular. Indeed, companies working on decentralized ledger technology (DLT) utilization offer a viable path for firms looking to diversify their portfolios. According to recent reports by Deloitte and LeadBlock, blockchain adoption is on the rise across the globe. Deloitte’s recent survey showed that about 39% of global organizations are deploying blockchain-based solutions in their operations.
BTCS is reportedly developing its own in-house consumer-facing digital asset data analytics platform and plans to acquire controlling interests in businesses in the blockchain industry.