What is the rate of return you can achieve by following a16z’s top 25 cryptocurrencies?

2024-07-11 15:08

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Original title: Copy Trading a16z: 2024 Performance Analysis

Original author: Ren & Heinrich, crypto researcher
Original translation: Chain Catcher

Andreessen Horowitz (a16z) is one of the most famous venture capital firms in the world. Their portfolio contains about 50 cryptocurrencies. In this analysis, I want to see if you, as a retail investor, can make a profit in 2024 if you copy trade, that is, invest in the same coin as a16z and sell it after about 5 months.

Assume some conditions first

• You copy trade as an individual investor (that is, invest in the same coin as a16z and sell it after about 5 months).

• Invest $100 in each of the top 25 coins by market cap in the a16z portfolio ($2,500 total).

• Investment period: from January 1, 2024 to June 6, 2024 (157 days).

In-depth Analysis

With these conditions, let’s see how the a16z portfolio would have performed since the beginning of the year.

The X-axis shows the time trend, and the Y-axis shows the percentage gain or loss. A value of 200 means that the corresponding cryptocurrency has increased by 100% based on the original value.

As we can see, the picture is complicated.

On the one hand, we have seen some cryptocurrencies doing well in price over the past few months, such as:

• Arweave (AR): +323%

• Goldfinch (GFI): +157%

• Ethereum (ETH): +63%

On the other hand, there are many that are falling in price, such as:

• XRP (XRP): -17%

• Optimism (OP): -38%

• ApeCoin (APE): -22%

Overall, 11 of the top 25 cryptocurrencies showed net growth. If the losses caused by the decline in the prices of other currencies are subtracted, the total sales price is $3158.82. Therefore, the total profit ($3158.82 - $2500) is $658.82, and the return on investment (ROI) is 26.35%, which is not bad.

In fact, people who only invested in Bitcoin or Ethereum during the same period would have made greater profits.

Obviously, unconditionally copying the Andreessen Horowitz portfolio is not the most ideal choice.

So how to get more profits?

What other ways are there to increase your chances of profiting by copying the top 25 coins in the a16z crypto portfolio? Let’s look at the timeline in more detail.

When Bitcoin started to rise in early March, the entire crypto market also saw a strong upward trend, but not all coins rose equally.

This chart compares the strong performers in the a16z portfolio with the weak performers (showing the average growth of coins that were positive or negative in early June).

We can see that the strong performers had significantly higher gains in early March (on March 13, +104% on average) than the weak performers (on March 13, +27% on average) and were able to maintain this advantage over the long term.

Thus, the strength of the gains is one of the indicators of whether it will perform well in the coming months.

Again, time is of the essence in cryptocurrency investing.

Just as Andreessen Horowitz does not hold their coins forever, you should always pay attention to the trend when copy trading and take the selling opportunities to keep only the most promising coins in your portfolio

What does "strong performance" mean?

This zoomed-in chart shows all the coins with positive gains until the beginning of June in green, and the others in red.

As of March 13, we can see that the strong performers have gained at least 40%, while the average performers are almost all below this level.

While there are no hard and fast rules to be drawn from this, it does show that if you sold half of the weaker performing cryptocurrencies in your portfolio around mid-March, you would have made a lot of money in June.

However, this does not rule out that these mediocre performers will perform better later on.

a16z's cryptocurrency portfolio demonstrates market diversity and challenges, and investors should be cautious when copying its strategy, always paying attention to market trends and the performance of individual coins.

In this rapidly changing field, timely buying and selling decisions are crucial to seize opportunities in volatility and achieve sustainable investment returns.