Crypto

Cryptocoins are currencies, not “investments”

While if you allocate to stocks / bonds, you invest into economically productive activities, with a crypto coins, there's no inherit value of the underlying asset - it's a currency, which is worth as much people think it's worth (alright, that’s true for stocks/bonds as well). You can't really invest in a currency - you're just holding a different kind of cash. Investing would be staking your coins, which is kind of equivalent to buying foreign government bonds in the chosen currency, or lending your crypto assets.

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With any of the crypto "investment vehicles", you're taking on a lot of systematic risk. The reason why prices are going up is because people think this will play a big part in the future. If there's a huge shock, the whole thing could more easily collapse than "traditional finance", as liquidity dries up, you can experience huge price fluctuations (lot larger than you think could be justified), which can then create a doom-loop of stablecoins getting de-pegged from the dollar, exchanges going bust, etc... And there's no central bank that could bring calm to these markets: there's one thing that they have done well since 1930s, which is to keep the global economy relatively stable.

(Margin) Lending

Currently, the crypto markets are retail-dominated, and very inefficient, still. There big players are only entering the market nowadays, slowly arbitraging these opportunities away. Retail traders are using unreasonable amount of leverage to long their favourite coins, and that creates dislocations in the futures markets, as well as opportunities to lend to these people.

When I wrote this, you could get 10-40% APY by lending stablecoins or USD on FTX or Kucoin and other exchanges, like BitFinex. Other than the systematic and counterparty risk, you are not affected by price fluctuations.

Arbitrage

The retail leveraged traders sometimes push the futures prices considerably above the spot price. You can start shorting the normal or perpetual futures, and buy an equivalent amount of coins at the same time, to get a market-neutral position that is almost guaranteed to yield profit. You can find the ranked list of opportunities on this site.

You can earn 20-60% with these market-neutral trades.

These types of relatively easy-to-exploit arbitrages opportunities also exist on Kraken, Binance and other exchanges.

Crypto Index funds

As with individual companies, I wouldn't recommend buying and holding individual crypto assets. The landscape changes fast, a specific asset that seem to had a huge potential may be succeeded by a different, technological superior alternative, quickly. If you're investing "manually", make sure you monitor the developments, and be prepared to make some decisions that may be emotionally discomforting:

📈Don't pick individual stocks / assets - There's a reason why index funds work

You also don't want to be exposed to the full volatility of these assets, as it hurts your long-term compounding ability:

🏅Avoiding losses is more important than chasing gains - Risk-adjusted returns

There are volatility managed versions of some of the crypto assets available, though:

Invictus - Bitcoin Alpha

Invictus - C10 Hedged

There are also a couple of non-hedged index funds worth considering:

Invictus - C20

Bitwise 10 (Be careful of the NAV premium)

“Volatility controlled” risky assets

Crypto ETFs

Be careful of ETFs trading on a large premium over their Net Asset Value. It means you're paying more for less - a premium that you may never be able to recover, as the price of the ETF long-term may converge to the actual value that ETF holds. Article

The other thing to note is that “crypto Futures ETFs” may not track the underlying asset’s price that well. Make sure you

Fees

Be mindful about the massive fees or spread you pay when you hold or trade crypto on Revolut, eToro and other retail platforms. Use low-fee crypto exchanges instead, like FTX or Binance.