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Using simulation tools, such as those from Into the Cryptoverse, investors can generate potential outcomes for various cryptocurrency portfolios. Each simulation examines the proportions of two significant cryptocurrencies: Bitcoin and Ethereum, showcasing how varying allocations influence expected returns and volatility.
Data indicates that for the highest Sharpe ratio—a measure of return per unit of risk—an optimal portfolio consists of approximately 79% Bitcoin and 21% Ethereum. This finding may seem surprising, given Ethereum's prominence in the market; however, the critical takeaway is the historical performance of both assets against each other.