Cryptocurrency Trading Strategy: Modern Portfolio Theory
“I believe in something called ‘portfolio science,’” Lou Kerner – a founding partner at venture capital firm CryptoOracle – tells Cryptocurrency News, “ pronounces that you assign a fraction of your assets to crypto, and then buy a basket of market-based assets, on an unvarying basis and without a concern for the prices. Over the long run, that’s how you increase returns.” Kerner is referring here to modern portfolio theory (MPT), which originated from a 1952 essay by American economist Harry Markowitz, A theory that works well as a cryptocurrency trading strategy. In its meekest form, MPT contains capitalizing in a range of assets, whose price activities are uncorrelated. Because of their uncorrelated-ness they incline not to fall and upsurge together, thereby, lowering the investor’s contact to separate specific asset risk and rescuing him or her from overall losses. And as Kerner suggests, if the investor selects their banquet of assets (including cryptocurrencies) pruden...