Benchmark Tracking

Benchmark tracking is the process of managing a portfolio to mirror the performance of a specific index or market benchmark. This is common in passive investment strategies where the goal is to match market returns rather than beat them.

In crypto, this might involve holding a basket of top tokens in proportion to their market capitalization. Benchmark tracking requires periodic rebalancing to ensure the portfolio weights remain aligned with the index.

It is a disciplined approach that reduces the risk of underperforming the market. For those who believe in the long-term growth of the sector, it is an efficient way to gain broad exposure.

It serves as a foundation for comparing the performance of more active, speculative strategies.