In the cryptocurrency world, where changes occur rapidly, finding reliable investment strategies is vital. 10x Research has provided a recommended strategy based on the comparison of Bitcoin and Coinbase.
The Pair Strategy from 10x Research
10x Research suggests a 'pair' strategy where investors can take a long position on Bitcoin and a short position on Coinbase. This means betting that Bitcoin will outperform Coinbase in its relative performance. The essence of the strategy is that if Coinbase shares are overvalued compared to the historical performance of the crypto market, and Bitcoin continues to grow, this strategy may yield good results.
Coinbase Market: Assessment and Risks
10x Research claims that the high valuation of Coinbase shares may be unsustainable. In two months, COIN shares have shown an 84% increase, but this increase is not accompanied by a rise in trading volumes, raising concerns about the justification for such a leap. The gap between the rise in share value and the fundamental business metrics indicates potential market cooling.
Bitcoin’s Strength in Crypto Investments
In contrast to Coinbase, Bitcoin continues to demonstrate reliability. Reasons for optimism regarding Bitcoin include periodic halving events, institutional inflows, and its designation as a store of value. These factors make Bitcoin a strong asset for long-term investments, while Coinbase shares face potential challenges.
The recommendations from 10x Research emphasize the importance of analyzing fundamental factors when making investment decisions in the volatile cryptocurrency market. Investors should take into account current market valuations and asset dynamics to avoid unnecessary risks.
