On Feb 1, 2018, when The Apollo Capital Fund started the ten crypto assets with the highest market cap looked like this. On the column furthest to the right is ‘ROI to Today’, the asset’s return up until today.

Source: OnChainFX

Source: OnChainFX

There is an enormous difference in performance between these assets. For an asset that is down 80% from this date to be instead down 90% it needs to fall another 50%!

Jan 1, 2019 the same table looked like this:

Source: OnChainFX

Source: OnChainFX

In a sideways market is is easier to see the differences in performance between these assets very clearly. It should be noted that top 10 is not our investment universe at all. In fact from the list above the only two assets we hold are Bitcoin and Ethereum.

The above tables gives us a sense of the huge performance differences between crypto assets, but it doesn’t tell us the whole story.

One way to systematically look at the market is in different sector or verticals. Indeed, if you’re an investor in our fund you would have seen this type of sector break-up in our Quarterly Letters. We should further note that within these verticals we can further divide the space in sub-categories. For example within Decentralised Finance (DeFi), you have Lending, DEXes, Stablecions, Synthetic assets and so on.

This is the average performance of some different verticals year-to-date compared to Bitcoin and Ethereum:

Source: Messari and Apollo Capital

Source: Messari and Apollo Capital

And for comparison this is the median performance within the verticals:

Source: Messari and Apollo Capital

Source: Messari and Apollo Capital

Above charts clearly shows the breakout performance of DeFi in 2020. This is also evident looking at the metric Total Value Locked in DeFi as reported by DeFi Pulse which just surpassed US$1.5bn, a new all time high. What does it mean that the Median performance is lower than the Average performance above? To us, it indicates that you will want a relatively broad exposure to the credible assets within a sector. The key word here is credible.

Screen Shot 2020-06-23 at 1.56.56 pm.png

We ofter reiterate that indexing just doesn’t make sense crypto. The reason is that outside Bitcoin, everything else is more akin to VC investing where most projects will ultimately fail. We believe investing in assets that are credible within well defined market segments will deliver superior returns for our investors. Just take a look at the first table in this article again. If you would have indexed the top ten on Feb 1, 2018 your portfolio would have been down 76%. That’s very hard to recover from. By systematically combining top-down with bottom-up analysis within verticals we have significantly outperformed an indexing strategy.

You May Also Like

A Small Allocation

by Tim Johnston March 16, 2021

Please note this article is not personal financial advice. Apollo Capital are not privy to your personal financial circumstance therefore this article is general in its nature. The simulated portfolio weightings included in this article are for illustration purposes and should not be used as a guide for structuring your portfolio. Please do your own […]

DeFi Assets: Equity For The Decentralised World

by Matthew Harcourt April 13, 2021

In the early days of crypto assets it was extremely hard to find genuine economic value being created outside of Bitcoin. Many of the earliest crypto assets were either meme’s (DOGE) or variations of Bitcoin (Litecoin) with different experimental use cases. The launch of Ethereum in 2015 has enabled crypto assets to have greater utility […]

Scaling Ethereum

by Marc Woodward May 18, 2021

High gas fees have had a severe impact on the retail adoption of the Ethereum blockchain and Ethereum based DeFi. The excessive cost to transact often causes retail investors to overlook the fundamentals of Ethereum in search of a quicker, cheaper and ‘easier’ option. While this has caused frustration for believers in Ethereum, you can’t […]