The Economist’s Which MBA? site recently hosted digital asset exchange Kraken’s investment case-study competition where participants were tasked with coming up with the best investment plan for potential investors who had a given amount of money to invest in a set time period. 13 teams from around the world competed from various universities and business schools.
Teams were asked to decide the best plan if they had $1m to invest across two blockchain technologies, Bitcoin and Ethereum, by buying bitcoins and ethers. In the challenge, the investment could not then be touched for the next 5 years. Kraken’s experts selected the top three proposals, and visitors to the case study competition website voted for the People’s Choice winner.
First place was awarded to the team from Tulane University’s Freeman School of Business who created a minimum-variance portfolio of 67% Bitcoin and 33% Ether based on historical-return data of the two cryptocurrencies. They validated their strategy using a multiple regression model, back-testing and a Monte Carlo simulation.
In second place was the team from Ryerson University’s Ted Rogers School of Business who proposed a 69:31 investment ratio for Bitcoin and Ethereum respectively. According to the team, Bitcoin offered a higher expected value, but the volatility and speculative nature of cryptocurrencies indicated a need for diversification across platforms. Receiving the most votes from the general public, they also won the People’s Choice Award.
Third place was awarded to Brigham Young University’s Marriott School of Business who based their Bitcoin-heavy portfolio on the cryptocurrency’s established presence in the market, stable functionality and finite supply.
Jesse Powell, CEO of Kraken, commented: “We at Kraken would like to thank all 13 teams that participated in the challenge to optimise a $1 million, five-year Bitcoin-Ether portfolio. We enjoyed reviewing the variety of approaches taken across proposals. We’d like to stress that we did not assess proposals based on whether they represented Bitcoin-dominant or Ether-dominant portfolios. We are an agnostic exchange, which means that we do not prefer a certain digital asset over another. We evaluated proposals, including both the paper and the video from each team, based on other key qualities. The videos and papers have already generated organic conversation among viewers that will help encourage beginners to learn more about the value of digital assets. We’re very happy to have had the opportunity to witness some of the great brainpower that’s out there coming through these MBA programs. We hope that the participants enjoyed evaluating two new assets that will undoubtedly be part of a very large class of digital assets in the future.”