Background
Last updated
Last updated
Cindex perceives a substantial opportunity within the crypto asset management sector, estimated to surpass $750 billion. Drawing insights from the influence of traditional finance indices, where ETFs hold a significant portion of the US stock market, we envision a parallel growth potential in the crypto market, projected to reach $10 trillion within 5-10 years. This anticipated growth suggests that asset management in the crypto domain could approach a value of approximately $2.5 trillion.
Furthermore, witnessing a notable surge in decentralized exchange (DEX) trading volumes during the previous bullish market cycle, it hints at an upsurge in decentralized asset management methods, projecting a potential 30-40% penetration over the next 5 years. In this scenario, the decentralized asset management sector might amount to roughly 30% of the projected $2.5 trillion, indicating a market scope of about $750 billion.
Passive investment has several advantages for investors. Firstly, it allows for the aggregation of investment thesis, which can help investors to diversify their portfolios and reduce risk. Secondly, passive investment can lower the alpha risk of a portfolio by reducing the impact of individual security selection. Finally, passive investment can enhance liquidity by providing investors with easy access to a diversified portfolio of securities. These advantages make passive investment an attractive option for many investors.
Passive investment has become increasingly popular in recent years, with both individual and institutional investors adopting this approach. The assets under management (AUM) for passive investment have grown at a compound annual growth rate (CAGR) of 23% over the past 5 years. This growth indicates that passive investment is becoming an increasingly important part of the investment landscape.
