Coinbase Asset Management CEO’s allocation recommendation
“You’re gonna, at least for a period of time, wish you’d had a million bucks in solana”
oneshot1/Shutterstock modified by Blockworks
This is a segment from the Empire newsletter. To read full editions, subscribe.
Trump’s win could have you cooking up all sorts of profitable trading strategies.
It’s only natural, considering it feels like we’re on the cusp of a new paradigm: for arguably the first time ever, US regulators might take it easy on crypto and let innovation flourish.
And so the topic of risk appetite came up on today’s Empire podcast episode.
Yano asked Eric Peters, CEO and CIO of both Coinbase Asset Management and One River, what he’d prescribe for a 30-40-year-old first-time crypto investor who has a million dollars to allocate and a strong appetite for risk.
“I would advocate for them to be overweighted to bitcoin and ether but have some exposure to solana. Maybe 50/35/15 [percent], something like that,” Peters said. “[But] I think if you’re right on that trade, you’re gonna, at least for a period of time, wish you’d had a million bucks in solana.”
The question was really posed within the immediate context. Still, we can backtest Peters’ suggestion.
And even better, plot it alongside Coinbase’s new benchmark crypto index COIN50, which is currently weighted 51.5% BTC, 23.4% ETH, 7% SOL with the remaining 18% or so spread across 47 other altcoins including DOGE, XRP, BCH and BONK.
The above, in log view, plots the value of that $1 million allocation from the end of 2020, which is when COIN50’s performance data starts.
There’s indeed an element of time bias. The period starts in the leadup to the epic 2021 bull run when SOL’s market cap was under $100 million (now $117 billion).
So, back then, it would be questionable just how likely it would be to split a million-dollar allocation between BTC, ETH, and a token so small in relative terms.
In any case, the purple shows the split highlighted by Peters, which turned $1 million into $27 million and would now be at all-time highs for dollar value.
ETH maxis were second best with $4.2 million. And while there are currently no ETPs tracking COIN50, if there were, that vehicle would’ve converted to a $3.8 million portfolio.
Someone who aped a million dollars in BTC meanwhile would be holding $3.15 million right now.
For scale: Anyone who bought an index fund tracking any major benchmark from legacy finance would, at best, be sitting on $1.64 million, via the Nasdaq 100.
That’s a minimum $1.5 million difference between stocks and crypto. It’s hard to put an exact value on risk appetite, but that’s as solid a number as any.
Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.
Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.
Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.
The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.
