Montrachet is a blockchain investment-led consulting company. We have developed state-of-the-art blockchain portfolio construction techniques to help our clients unlock the right opportunities in a fast-evolving crypto world.
We build dynamique, secure and compliant blockchain investment vehicles for private individuals, asset managers, financial institutions, crypto protocols and exchanges. We deploy a holistic approche, we accurately monitor the crypto markets, anticipate trends and opportunities, and develop different investment solutions offering optimal conditions to increase profits while taking measured risks.
One of our main product is the Montrachet C10 Index, this blockchain index solution is also available in white-label, contact us for more info...
Why we build the C10 Index ?
The cryptocurrency market is irrational and fundamental cryptocurrency valuations are not well understood.
While we don’t have an opinion on how the market prices individual coins, we are confident that the price and value of cryptocurrencies will increase in the long run. We’re firm believers in the underlying technology.
Most investors don’t benefit from taking on unsystematic risk. If you’re confident about the crypto market, then it is wiser to bet your money on the entire cryptocurrency market rather than test your luck picking individual coins. The performance of “the market” is the capitalization-weighted average of the performance of all the investors in the market. Therefore, if some traders outperform, the others must underperform.
Most active traders don’t realize how difficult it is to consistently beat the market. Over the last 15-year period, 95% of active funds failed to beat index funds.
It becomes even harder to beat the market after we consider all the time spent doing research (opportunity cost) and transaction costs incurred while trading.
Constructing a Total Market Index
The ideal index consists of every single coin in the market, weighted by market cap. Unfortunately, creating such a portfolio is infeasible because of minimum trading amounts and trading fees. The only option left is to take a sample.
In principle, the larger the sample, the more accurate it will be in tracking the overall market. But as the sample grows larger, the more difficult and costly it is to maintain.
Most indices take the top N coins by market capitalization because the top coins capture a higher % of the total market cap. But if we simply weighted the top 10 coins by market cap, we would end up with a portfolio that is extremely top-heavy. The index wouldn’t do a great job at capturing the risk & performance of the lower-capped coins.