In Crypto We Trend

Man Group

Andre Rzym, Archibald Fraikin, Tarek Abou Zeid

Research

7 Pages

Man Group explains that cryptocurrencies may be well suited to trend-following approaches due to their inherent liquidity, volatility and lack of fundamental valuation anchors.

Key Takeaways

Optimal portfolio size: Trend-following on 10–15 coins balances diversification benefits and transaction costs.
Volatility scaling: Adjusting exposure based on volatility helps manage risk in crypto markets.
Limited diversification: High correlations among cryptocurrencies limit diversification benefits.
Behavioral factors: Investor emotions like fear and greed contribute to pronounced trends in crypto markets.
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