6533b7ddfe1ef96bd1273c1e

RESEARCH PRODUCT

The Principles of Creating a Balanced Investment Portfolio for Cryptocurrencies

subject

description

Despite their novelty, cryptocurrencies have by now acquired certain popularity due to convenience in making payments, high speed of transactions and the application of modern technology to ensure transaction security among other things. The aim of this research is to evaluate cryptocurrencies as an investment instrument. The tasks of the research are as follows: (i) to evaluate a hypothesis about potential profitability of the cryptocurrency investment portfolio, (ii) to analyse cryptocurrency investment profitability, (iii) to assess the attractiveness of creating an investment portfolio of cryptocurrencies, and (iv) to provide recommendations to a potential investor for creating an investment portfolio comprised of cryptocurrencies. The research methods used include statistical data analysis and econometric modelling. Applied results were obtained using correlation-covariance analysis yielding a balanced profitable investment portfolio according to the Markowitz model. The results of the research have allowed the authors to conclude that cryptocurrencies would be an attractive investment instrument; the following indicators can be used to assess the attractiveness of cryptocurrency: market capitalization, the objectives of currency creators (issuing tokens on different resources to currency holders, bounty programs, etc.), trend assessment, and the analysis of reproducibility and replicability of the platform on which the cryptocurrency is built.