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Top Crypto Index Funds You Should Consider in 2021
The crypto market is back on track as we saw new all-time highs in the past weeks. Unlike in 2017, when speculative investors were the driving force behind the bull run, there is a strong push from institutional investment firms fueling this go-around. Bitcoin and the entire crypto market have reached a tipping point in adoption. For this reason, now is one of the best times to invest in the market.
Why Index Funds are a Smart Strategy
Index funds have been around for a long time in the traditional financial sector. These portfolios consist of stocks or bonds designed to mimic a financial market index’s composition and performance. Crypto index funds include blockchain projects and networks. Consequently, these funds allow you to track the crypto markets’ performance by holding a single crypto asset.
Crypto Index Fund Benefits
Investing in a crypto index fund makes sense considering the benefits gained. Index funds have lower expenses and fees than actively managed funds. In addition, depending on where you live, there are also tax advantages because they generate less taxable income.
The highly diversified nature of index funds also reduces risk. History has proven that these financial instruments outperform other types of mutual funds in the market. As such, their addition to the crypto market was welcomed by investors. However, it’s vital to understand that every index fund is different. Here are the top 5 crypto index funds to consider adding to your portfolio in 2021.
Amun Crypto Basket Index (HODL5)
The Amun Crypto Basket Index HODL5 is another fund with a strong market following. This index fund features the market’s top 5 and most liquid crypto assets. To improve ROIs, the platform introduces a volatility management methodology. This system weighs assets based on the 2050 market cap and other vital factors.
Investors enjoy additional functionalities and benefits when they invest in HODL5. For example, there is a higher level of privacy since the fund is based in Switzerland. However, this index doesn’t include any privacy coins. Speaking of features, users gain access to multiple tracking indexes, and your portfolio is automatically re-balancing monthly. Therefore, HODL5 is a wise choice for those looking for a safer fund that only requires a little selection.
Crypto20
The Crypto20 index fund entered the market in 2017. The fund was praised as the first tokenized crypto-only index fund. Since then, Crypto20 has continued to gain popularity due to a combination of factors. The fund features no broker fees, exit fees, minimum investment, and full control over your assets.
You gain access to a variety of options to increase your returns. For example, you can customize your portfolio from thousands of cryptocurrencies to suit your investment goals. Notably, this index fund rebalances weekly and caps each asset at 10%. This cap helps to ensure that your portfolio remains safe through diversification. In addition, every asset dropping can only affect its value by 10%.
Bitwise
Bitwise is another well-known index fund. It’s generally credited as the first cryptocurrency index fund to enter the market. However, this fund is only available to US citizens and accredited investors. In addition, the Hold10 index exclusively features only the top 10 cryptocurrencies weighted by inflation-adjusted market cap.
Bitwise leverages its size to achieve best-in-class trading execution. The platform creates a scenario where multiple market makers compete to buy and sell the firm’s assets. In the end, users receive better pricing alongside world-class security. In addition, Bitwise stores all investments in cold storage with an institutional third party. In this way, Bitwise can serve the needs of enterprise-level investors.
CIX.Fund
The CIX100 index fund combines two of the fastest-growing technologies in the market, AI (artificial intelligence) and blockchain. This index fund comprises the top 100 blockchain projects chosen by an AI-powered neural network algorithm. The AI protocol considers various factors to come to its final decision.
Developers claim the system analyzes more than 2000 coins. These coins are reviewed and ranked in 200 factors. This portfolio index is calculated every second in real time and rebalances continuously as the cryptocurrency market changes. In addition, the fund integrates with various top exchanges via secure API, including OKEX, Binance, Huobi, Bitfinex, Kraken, and many more. The flexibility and interoperability of this index fund make it a top contender on any list.
Top 5 Crypto Index Funds to Consider in 2021
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Now that you better understand the top 5 index funds to consider in 2021, you’re prepared to expand your investment strategy. The key to success is DYOR, and always stick with reputable platforms, funds, and exchanges to avoid unnecessary losses. Investing in crypto index funds can be hugely profitable if done correctly. Any of these funds will give you a great start to your index portfolio.
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