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In investment terminology, volatility is usually the prime determinant of reward and risk. Jeff Park, Bitwise’s Head of Alpha Strategies, recently drew an interesting parallel—comparing Strategy Shares to altcoins because they are highly volatile. So, what does this imply for investors?
Understanding Strategy Shares and Altcoins
Strategy Shares are actively managed investment vehicles that are meant to take advantage of certain market opportunities. As they look to provide high returns, they typically go through rather wild price swings, similar to altcoins in the digital currency space.
Altcoins, or alternative tokens, are also notorious for being speculative and having wild price movements. Unlike Bitcoin, which has become a digital asset mainstay, altcoins tend to register wild volatility, hence they are risky investments to make.
Why Jeff Park Sees a Similarity
Park’s analogy between altcoins and Strategy Shares is that they share their unpredictability. Both assets can experience sudden price spikes followed by sharp drops. While some investors enjoy these conditions, others will find them too risky.
The Takeaway for Investors
Knowing the volatility of an asset is important when creating a diversified portfolio. If you’re looking into Strategy Shares, be aware that they might act like altcoins and need cautious risk management.
Would you buy highly volatile assets such as Strategy Shares or altcoins? Let us know what you think in the comments!
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