Cryptocurrencies Shift Dominance - Exploring Why We Invested in Ethereum and Maintained Flexibility
In the past week, the cryptocurrency market has seen significant changes, with institutional investors increasingly turning their attention to Ethereum and Solana. According to a strategic investment approach, the price of Ethereum rose by 21.9% from July 11 to July 18, while Solana saw a 11.4% increase during the same period.
The strategy, which maintains a core anchor in Bitcoin, has remained overweight on Ethereum and Solana. This decision was largely influenced by Ethereum's Proof-of-Stake mechanism, which enables continuous earning through staking, and the regulatory clarity provided by the recent GENIUS Act. These factors have fostered broader institutional adoption and confidence in ETH as a long-term productive asset.
The strategy's Ethereum position transitioned from 10% to 12% to 27%, with an initial price of $2,975. The Solana position, initially at 5%, was increased to 8%, with an initial price of $164. The strategy's Bitcoin position, however, saw a slight decrease from 60% to 55%, with a price of $117,700.
The weekly highs for Bitcoin, Ethereum, and Solana were $122,761, $3,625, and $182.7, respectively. Notably, Ethereum has been serving as the market's leading indicator, driving cycle leadership through open interest, ETF flows, and corporate treasury adoption.
The strategy's active rebalancing approach has proven effective, as it trimmed Bitcoin at its strength and reallocated to Ethereum and Solana, staying ahead of market shifts. This strategy was justified by the surge in ETH derivatives and the momentum created by U.S. crypto bills passing.
However, the strategy's early profits on altcoins led to missing part of the second wave of gains, particularly in ETH and SOL. Additionally, Solana was overweighted prematurely, before ETF outflows and relative underperformance became more apparent, dampening short-term returns.
The strategy is cautious, monitoring Bitcoin's ability to hold above $120K, the sustainability of Ethereum inflows and leverage, and macro catalysts that could shake overheated markets. The strategy also maintains a consistent 10% cash allocation to manage volatility and de-risk at key points of overheating.
In conclusion, the active crypto strategy has seen gains in Ethereum and Solana, driven by institutional interest and regulatory clarity. The strategy's active rebalancing approach has demonstrated its effectiveness in navigating the fast-paced cryptocurrency market.
