Analysis of investment strategies in cryptocurrencies

Abstract

Cryptocurrency investment is a rapidly growing financial sector, marked by high volatility, decentralized technologies, and significant profit potential. Investors use strategies like long-term holding (“HODLing”), portfolio diversification, and short-term trading. “HODLing” relies on long-term value appreciation but requires resilience to price fluctuations. Diversifying with assets like Bitcoin and Ethereum reduces risk due to their low correlation with traditional investments. The crypto market is highly sensitive to geopolitical, economic, and technological factors, attracting investors during economic instability. Advanced models like LASSO and AutoEncoder aid in price prediction and strategy optimization. Despite high return potential, careful risk management is essential due to volatility and regulatory uncertainty. This study experimentally applies identical cryptocurrency portfolios to different investment strategies, identifying the most profitable approach.