What are the returns of the top 25 cryptocurrencies in the a16z cryptocurrency investment portfolio?
In this rapidly changing field, timely buying and selling decisions are crucial.Author: Ren & Heinrich
Andreessen Horowitz (a16z) is one of the most renowned venture capital firms in the world. Their portfolio includes around 50 cryptocurrencies. In this analysis, I want to explore whether, as a retail investor, you could profit in 2024 by copy trading, that is, investing in the same coins as a16z and selling them approximately 5 months later.
Let's Assume Some Conditions First
• You, as an individual investor, engage in copy trading (i.e., investing in the same coins as a16z and selling them approximately 5 months later).
• Invest $100 in each of the top 25 coins by market capitalization in the a16z portfolio (totaling $2500).
• Investment period: from January 1, 2024, to June 6, 2024 (157 days).
In-Depth Analysis
With these conditions, let's see how a16z's portfolio would have performed since the beginning of the year.
The X-axis shows the timeline, and the Y-axis shows the percentage of gains or losses. A value of 200 means that the corresponding cryptocurrency has grown by 100% based on its original value.
As we can see, the situation is complex.
On one hand, we see that some cryptocurrencies have performed well in terms of price over the past few months, such as:
• Arweave (AR): +323%
• Goldfinch (GFI): +157%
• Ethereum (ETH): +63%
On the other hand, there are also many that have seen price declines, such as:
• XRP (XRP): -17%
• Optimism (OP): -38%
• ApeCoin (APE): -22%
Overall, 11 out of the top 25 cryptocurrencies showed net growth. After subtracting the losses caused by the decline in other coins, the total sale price would be $3158.82. Therefore, the total profit ($3158.82 - $2500) is $658.82, resulting in a return on investment (ROI) of 26.35%, which is quite good.
In fact, those who invested solely in Bitcoin or Ethereum during the same period would have made greater profits.
Clearly, blindly copying Andreessen Horowitz's portfolio is not the most ideal choice.
So How Can You Achieve More Profit?
What methods are there to increase profits from copy trading the top 25 cryptocurrencies in the a16z portfolio? Let's take a closer look at the timeline.
When Bitcoin started to rise in early March, the entire cryptocurrency market also experienced a strong upward trend, but not all coins increased at the same rate.
This chart compares the strong-performing coins in the a16z portfolio with those that performed mediocrely (showing the average growth of coins with positive or negative growth by early June).
We can see that the strong-performing coins had a significantly higher increase in early March (March 13, average +104%) compared to the mediocre ones (March 13, average +27%), and they were able to maintain this advantage over time.
Thus, the intensity of the increase is one of the indicators of whether their performance will be good in the coming months.
Again, it's important to note that timing is crucial in cryptocurrency investment.
Just as Andreessen Horowitz does not hold onto their coins indefinitely, you should always pay attention to trends when copy trading and seize selling opportunities, keeping only the most promising coins in your portfolio.
What Do "Strong" and "Mediocre" Performances Mean?
This enlarged chart shows all coins with positive growth by early June in green, while others are shown in red.
As of March 13, we can see that these strong-performing coins had an increase of at least 40%, while the mediocre ones were almost all below this level.
Although no fixed rules can be derived from this, it shows that if you had sold half of the weaker-performing cryptocurrencies in your portfolio around mid-March, you would have made substantial profits by June.
However, this does not rule out the possibility that these mediocre performers may perform better later on.
The a16z cryptocurrency portfolio showcases market diversity and challenges, and investors should be cautious when copying their strategies, always paying attention to market trends and the performance of individual coins.
In this rapidly changing field, timely buy and sell decisions are crucial to seizing opportunities amidst volatility and achieving sustainable investment returns.
