How Crypto Baskets Protect Investors From Volatility
Crypto baskets are a strengthening trend among various crypto platforms, Circle Invest, a crypto-trading app, being the latest to join the existing ones. Circle Invest, owned by Circle, a crypto startup backed by investment bank Goldman Sachs, and available in the USA, only, yesterday announced they would be adding a new feature to their crypto investment app dubbed “Collections.”
This is only one in a series of a growingly popular phenomenon, following Coinbase, the US-based fiat-to-crypto exchange and wallet service, and Abra, a digital currency wallet and exchange, announcing their own, separate bundles within days of each other.
One of the main advantages of the coin bundle in diversifying risk, shielding investors from the volatility of individual coins.
The Trend Of Crypto Baskets
Coinbase is a very popular exchange, having added 7m new users – bringing the total to well over 20m – in the first quarter of this year. It’s no surprise, then, that this exchange would offer a coin bundle. They’re a convenient tool for new investors to gain exposure quickly without placing all their capital into one asset. As Coinbase says on its website, bundles are an “easy” and “convenient way to buy the first 5 cryptocurrencies that were listed on Coinbase,” suggesting that the product is hardly aimed at hardened traders.
A California-based startup Abra has been said to be trying to “one-up” Coinbase by announcing that, starting October 3rd, “anyone around the world with access to Abra can now make an investment in the new Bitwise 10 Crypto Index Token or BIT10 for short.” Thanks to their partnership with Bitwise, a San Francisco-based cryptocurrency investment service provider that has become well-known for its privatized indexes, the startup explains that by offering the top 10 largest cryptocurrencies by market capitalization, investors in BIT10 will gain exposure to 80% of the crypto market (well, at the time of writing this share is 85%.)
One company, imaginatively named ‘CoinBundle‘, allows users to pick a product based on the risk, or more personal factors. A quick look on the website shows the company offers an environmentally-friendly coin bundle, including coins with a smaller emphasis on mining, as well as a halal product where assets conform to the strict requirements of Islamic finance.
Crypto Bundles As A Tool For Mass Adoption
Crypto has always been very unpredictable. This is a double-edged sword for the investor. On the one hand, the lucky speculator can see double-digit returns on initial investments; on the other, these gains can be wiped out overnight. The stablecoin resolutions being formed over the past few months may give traders some exposure to crypto, but with a shield from its wild price variations.
The coin bundle has so far been marketed to the entry-level investor, but it might soon find demand from other places. Coinbase’s announcement last month raised the profile of the coin bundle. Many will want to carry on trading coins as separate assets.