What exactly are the returns on a16z's cryptocurrency portfolio of the top 25 coins?

Author: Ren & Heinrich

Andreessen Horowitz (a16z) is one of the most famous venture capital firms in the world. Their portfolio contains around 50 cryptocurrencies. In this analysis, I want to see if, as a retail investor, you can make a profit in 2024 if you do a copy trade, i.e. invest in the same coin as a16z and sell it about 5 months later.

Assume some conditions first

•You conduct copy trading as an individual investor (i.e. invest in the same currency as a16z and sell it after about 5 months).

• Invest $100 in each of the top 25 coins by market capitalization in the a16z portfolio ($2500 total).

•Investment period: from January 1, 2024 to June 6, 2024 (157 days).

Deep Analysis

With these conditions in mind, let’s take a look at how a16z’s portfolio has performed since the start of the year.

The X-axis shows the time trend, and the Y-axis shows the gain or loss percentage. A value of 200 means that the corresponding cryptocurrency has grown by 100% based on the original value.

As we can see, the situation is complicated.

On the one hand, we have seen some cryptocurrencies with good price action over the past few months, such as:

• Arweave (AR): +323%

• Goldfinch (GFI): +157%

• Ethereum (ETH): +63%

On the other hand, there are also many prices falling, such as:

• XRP (XRP): -17%

• Optimism ( OP): -38%

• ApeCoin (APE): -22%

Overall, 11 of the top 25 cryptocurrencies showed net growth. If losses caused by falling prices in other currencies are subtracted, the total sales price is $3,158.82. So the total profit ($3158.82 - $2500) is $658.82 and the return on investment (ROI) is 26.35%, which is not bad.

In fact, people who only invest in Bitcoin or Ethereum will make greater profits during the same period.

Obviously, unconditionally copying Andreessen Horowitz’s portfolio is not the most ideal choice.

So how to get more profits?

What are the other ways to increase profits by copying the top 25 coins of a16z cryptocurrency portfolio? Let's look at the timeline in more detail.

When Bitcoin started rising in early March, the overall cryptocurrency market also saw a strong upward trend, but not all coins rose equally.

This chart compares strong performers and underperformers in the a16z portfolio (showing the average growth of coins with positive or negative gains in early June).

We can see that the gains of strong-performing coins in early March (March 13, average +104%) were significantly higher than those of mediocre coins (March 13, average +27%) , and be able to maintain this advantage for a long time.

So the strength of the gains is one of the indicators of whether it will perform well in the coming months.

Once again, time is of the essence in cryptocurrency investing.

Just like Andreessen Horowitz will not hold their coins forever, you should always pay attention to trends when copying trades and take advantage of selling opportunities, keeping only the most promising coins in your portfolio

What does it mean to perform “strong” and perform “mediocre”?

This zoomed-in chart shows all coins with positive gains through early June in green, and others in red.

As of March 13, we can see that the gains of these strong-performing coins are at least 40%, while the mediocre ones are almost all below this level.

Although no fixed rules can be derived from it. But it shows that if you sold the weaker crypto half of your portfolio around mid-March, you would have made a substantial profit in June.

However, this does not rule out that these mediocre performers will perform better later.

a16z’s cryptocurrency portfolio demonstrates market diversity and challenges. Investors should be cautious when copying its strategy and always pay attention to market trends and the performance of individual currencies.

In this rapidly changing field, timely buying and selling decisions are crucial in order to seize opportunities amid fluctuations and achieve sustainable investment returns.

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