If you’ve seen media coverage of Bitcoin and the rise of cryptocurrencies, you’re probably thinking of getting into the action, if you haven’t already. One startup wants to provide an index fund type of product that lets investors combine their holdings, manage risk and get returns from a bull market.
Aggregated Coin (AGRE) and UpStart1K (UP1K) are ICOs that will launch on December 1st.
The AGRE token is an investment vehicle for people who want to diversify their crypto holdings to include the top six coins. So that when you buy Aggregated Coin, you’ll own weighted positions in Bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin and Dash. These have gained nearly 800 percent since October 2016.
Some retail investors are sitting on the sidelines because many of these digital coins are unregulated, unbacked by central banks or governments and can be volatile. Combining them into an index fund type of portfolio is a way to manage risk and reduce volatility, while riding the gains of a hot market.
According to the venture’s founders, AGRE splits U.S. dollar investments into six equal parts. When one of these blue-chip cryptos lose value, any price upswings from other blue-chip coins can absorb the loss and still result in overall portfolio gains.
The second token, Upstart1K, focuses on smaller coins. The same team researches small coins and selects promising ones for inclusion into the UP1K portfolio. The holding will ultimately consist of selected coins, tokens and ICOs. This index fund type of portfolio caters to investors who want to participate in the upside of promising tokens, who don’t have the time to conduct due diligence on each one. The combination of selected coins, tokens and ICOs also diversifies risk while allowing an investor to ride segment performance.
“The risk is higher but so is the potential reward,” according to a co-founder. “The UP1K coin is set up so that on average the wins and losses cancel each other out and if the market as a whole is bullish then the coin will increase in value.”
All cryptocurrencies currently have a total market capitalization of one-quarter of a trillion dollars, with Bitcoin enjoying a dominance of between 55-60 percent of the market. However, that’s small compared to the $9 trillion of capital allocated in gold. One Wall Street analyst estimates that if 2-3 percent of the money currently invested in gold shift to Bitcoin, BTC’s price could reach $25,000. And that’s just gold — that figure doesn’t include silver, real estate or any other investment options.
Secondly, it’s telling that initial coin offerings (ICOs) are now raising more money than angel investing and venture capital. Many investors and libertarians have lost faith in the financial system since the 2008 Financial Crisis. But not just in America. Think of all the wealth that were lost in Venezuela, Greece, Cyprus, Iran and other banana republics due to economic mismanagement or corruption, or both.
Mainstream audiences are beginning to view cryptocurrencies not just as an alternative investment, but as a way to store value — and protect their net worth — at a time when central banks and governments are debasing their nation’s fiat currency through massive printing operations. The U.S. dollar has lost nearly 98 percent of its value since the inception of the Federal Reserve System in 1913.
Aggregated Coin and Upstart1K launch their ICOs on December 1st.
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