Portfolio investing is widely used when dealing with stocks in order to balance risks or earn profit from the growth of a specific economic sector. Some investors try applying this practice to the cryptocurrency market, but it's hard to say that it performs well.

Analytics firm K33 Research has calculated the yield of a portfolio consisting of the top 10 cryptocurrencies as of January 2018. At that time, the following assets topped the chart:

If a potential investor were to evenly distribute the amount invested across the listed cryptocurrencies, the return on the portfolio would now be -53%. By comparison, the S&P 500 was up 51% in the same period.

Among altcoins, only Ethereum managed to meet investors' expectations and compete with Bitcoin. The other coins have lost capitalisation for various reasons. For example, XRP (Ripple), which ranked second, has faced pressure from a US regulator and legal claims for allegedly holding an illegal ICO. Meanwhile, number 5 ranked Cardano has stumbled upon technical issues after it rolled out support for smart contracts.

However, that doesn't mean that altcoins can't be considered for long-term investing. Dogecoin has grown seven-fold to $0.07 per coin, and Solana, which premiered on crypto exchanges in 2020, still trades at more than 20 times its offering price.

The above arguments point to the poor performance of traditional portfolio investing. The cryptocurrency market is young, and coins see continuous rotation. Like a stock index, the underlying asset is Bitcoin, which many analysts recognise as a 'store of value'. However, one should be cautious when buying altcoins and focus on those with significant growth potential. One should also be ready to get rid of assets just in case the project faces any issues.

StormGain Analytical Group 
(platform for trading, exchanging and storing cryptocurrency)