With an average volume of about $60M USD, the SPY ETF is regarded by many seasoned investors to be the most liquid ETF on the stock market. SPY tracks the S&P 500 and is the largest and oldest ETF on the stock market.
So why do so many investors chose to diversify, rather than create their own ETFs? Put simply, diversification through indexing can increase the liquidity of an investor's portfolio, while maximizing returns, if you wish to invest in a single sector of a stock market.
ETFs on the stock market make money by charging an expense ratio. This is similar to a fee for using the ETF. The SPY ETF has a low expense ratio compared to other ETFs at 0.095%. Meaning if you invested $10,000, you would only pay $9.5 per year.
Decentralized indexes, however, do not charge an expense ratio. This is an advantage that indexes, like the TCAP Total Crypto Market Cap Index, have over-centralized counterparts. You would only need to pay network and exchange fees to purchase it. You incur no holding fees and no user fees.
Through TCAP, cryptocurrency investors gain exposure to the cryptocurrency market while mitigating risk from price volatility in any single crypto asset. Investing in any cryptocurrency carries its own risks, but by gaining exposure to the entire market at once with TCAP, you can insulate yourself from wild price swings, which can cause your portfolio to lose value.
Other crypto indexes, such as the DeFi Pulse Index offer investors exposure to just the DeFi market. It is only exposed to 16 DeFi tokens. The top three tokens included in the index are Uniswap, Aave, and Maker, and they make up 55.8% of the Index. Furthermore, you are limited to Zerion, Argent, and Dharma wallets if you want to store the index token.
The importance of diversification cannot be understated, particularly for investors with a cryptocurrency portfolio. Cryptocurrency markets are notoriously volatile, and it is for that reason that many veteran investors refuse to invest in cryptocurrency. Such price action highlights how $TCAP is a vital asset to have for crypto bulls.
$TCAP is also an excellent hedge against declining crypto prices. For example, many cryptocurrencies function on a Proof-of-Stake (PoS) model. Popular PoS cryptocurrencies include Cardano, Solana, Polkadot, and Algorand. In such a model, users stake their tokens on a protocol and receive rewards in exchange for their collateral. Rewards are often paid in the token that has been staked; if you stake DOT, you earn DOT rewards. The rewards paid increase the circulating supply of that token.
By increasing the circulating supply, the value of each token may drop, but the market cap of that crypto may actually increase if it outpaces the drop in price due to inflation. Under this arrangement where the token's market cap increase outpaces inflationary price reduction, the total crypto market cap also increase. Therefore, $TCAP would enjoy an increase in price that reflects the increase in the total crypto market cap.
When asked why they own so many cryptocurrencies, investors will often reply that they believe in the long-term viability of cryptocurrency and its apparent trajectory in replacing the current global financial system. If you believe that DeFi will replace the current financial system, buying and owning a bunch of different cryptocurrencies makes sense. Whether it's DEFI tokens, NFTs, or store-of-value tokens, there are vast differences in what cryptocurrencies are able to do.
When looking to diversify your portfolio, many investors look to centralized exchanges listing their tokens as a sign that the project is on doing things right. However, there are many more credible projects listed on DeFi exchanges such as Uniswap and SushiSwap. Reducing your crypto exposure only to those listed on centralized exchanges limits you to a relatively small portion of the cryptocurrency market.
$TCAP is the ideal investment for long-term investors who are looking to gain exposure to the whole crypto market and want to bet on the long-term viability and value of cryptocurrency. And while $TCAP will likely not make dramatic price movements in the short term, the long-term outlook for the total crypto market appears to be positive in a big way, judging by sentiments shared on Bitcoinist. Therefore, $TCAP's peg to the total market cap of crypto makes it an excellent addition to any cryptocurrency portfolio.
SPY continues to be one of the most popular ETFs on the stock market, and TCAP aims to provide the same services, but for the cryptocurrency market. Just as SPY tracks the S&P 500 index, TCAP tracks the TCAP index, which follows the total crypto market cap, and allows investors to gain exposure to the entire market. Over time, the TCAP index, and $TCAP by extension, could become just as popular to crypto investors as SPY is for traditional ETF investors.
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