Why you should invest beyond Bitcoin

When we talk about cryptocurrencies we always talk about Bitcoin. But the digital assets space has a lot more to offer that investors should look into.

Bitcoin is omnipresent in the digital assets space. As the oldest and most dominant cryptocurrency by market cap Bitcoin is part of nearly every conversation in the space. At the same time, many investors who want to start investing into digital assets ask themselves if they should consider investing beyond it into other tokens summarized under the name altcoins (alternative coins to Bitcoin). While currently Bitcoin is undoubtedly the most dominant cryptocurrency one would ignore many opportunities when only sticking to it.

One common misconception in the digital assets space is that other tokens such as Ether or XRP are competing with Bitcoin as they have the same use case. Similar to fiat currencies like the Euro, US Dollar and Swiss Franc that serve the same purpose. This is not the case.

Catch the whole wave of the blockchain revolution

Over the last decade many Bitcoin proponents have seen the opportunity of leveraging Bitcoin’s protocol architecture which enables decentralized computation to create a diverse range of applications. Prominent examples are Ethereum, Ripple and Polkadot with their respective tokens.

Contrary to Bitcoin Ethereum is not primarily seen as a store of value but an enabler for decentralized computation. To code and run programs on top of the Ethereum blockchain Ether the native token is needed similar as a car would require oil to drive, XRP on the other side is focusing on global payments making the process more effective, faster and cheaper and Polkadot is working on inter blockchain communication.

The list could go on and on as there are hundreds of diverse use cases for digital assets. Therefore, an investor should invest into a selection of the largest tokens to be exposed to the full extent of the blockchain revolution and not limit his investments to one use case. As the market is young it is possible that other tokens either with better technology or with a focus on certain use cases will overtake Bitcoin in the future in terms of market cap and usability.

Invest into the next Bitcoin

Investing into altcoins offers the opportunity to participate in the potential upside of these protocols as they offer great promise to grow exponentially as Bitcoin did in the last decade. As most altcoins have emerged in the last 5 years, they often offer a more efficient technology than Bitcoin in terms of transaction speed, security and interoperability but lack awareness and user base. Historically, altcoins have outperformed Bitcoin in bull runs due to the perceived upside compared to Bitcoin. This is also shown in the Sygnum Platform Winners Index ETP which outperformed Bitcoin due to its altcoin constituents.

For investors interested in diversified and fully rules-based exposure to digital assets, the Sygnum Platform Winners Index ETP is listed on the Swiss stock exchange, and provides a unique, diversified, liquid, cost-efficient and collateralized investment opportunity. It is the first index to only track base-layer cryptocurrencies in a systematic, rules-based manner according to three areas of positive network effects with the potential to drive exponential growth:

1. Accelerating adoption by investors in global financial markets

2. Rising numbers of developers working to support and expand the protocol

3. Growing numbers of real-world applications the protocol is being used for

Only tokens that have significant ecosystems with accelerating network effects in all three dimensions are eligible for inclusion in the index, and are weighted accordingly. The outcome is a portfolio of up to ten attractive tokens that currently includes established protocols like Bitcoin and Ethereum, as well as rising stars such as Cardano, Polkadot, and more.

You can download the Sygnum Platform Winners Index ETP factsheet here or invest via you bank on the Six Exchange. For more information on Sygnum’s range of asset management solutions, please contact us on asset-management@sygnum.com

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This document is purely for educational purposes and has been issued by Sygnum Group. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a marketing communication. It does not constitute an offer or a recommendation to subscribe, purchase, sell or hold any security or financial instrument. It contains the opinions of Sygnum Group, as at the date of issue. These opinions and the information contained herein do not take into account an individual‘s specific circumstances, objectives, or needs. No representation is made that any investment or strategy is suitable or appropriate to individual circumstances or that any investment or strategy constitutes personalized investment advice to any investor. Therefore, you must verify the above and all other information provided in the document or otherwise review it with your external advisors. Some investment products and services, including custody, may be subject to legal restrictions or may not be available worldwide on an unrestricted basis. The information and analysis contained herein are based on sources considered as reliable. Sygnum Group uses its best efforts to ensure the timeliness, accuracy, and comprehensiveness of the information contained in this document. Nevertheless, all information indicated herein may change without notice.