Bitcoin has low correlation with traditional assets and is becoming a new asset class favored by institutions

Why relevance has an impact

The investment judgments of retail investors are mainly based on sentiment, price trends and news. The decision-making process of institutional investors is more complicated and is carried out on advanced models, which usually consider the correlation between the assets contained in the portfolio. Risk management is the key to the long-term survival of professional investment entities . The best way to assess risk is to start by determining the relationship that connects different assets statistically.

New players in the game

Interestingly, the main driver of the collapse of the crypto market may be the reaction of short-term investors and speculators . From the number of open leveraged positions on Bitfinex , we can see that short sellers have increased their risk exposure at a record rate, while buyers have to close their positions due to sudden margin calls and liquidation. We can assume that at least some of these short-term traders also invest in stocks and stock derivatives, so their trading must be adjusted accordingly.

Brand new game

Participants in the new and old markets have different views on the market, reflecting both short-term fluctuations and driving macro trends, depending on which one is the dominant force that day.

Strategic opportunity

Traditional currencies with the lowest volatility are those assets that investors more often add to their long-term investment portfolios. However, derivatives of EUR/USD, GBP/USD or JPY/USD are traded in large numbers around the clock by traders every day.

Conclusion

As Bitcoin becomes a new asset class, more investors will recognize its value-added in a diversified investment portfolio. The low long-term correlation with other existing assets represents a unique risk/return form of investment decision.

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比特币新闻 — 区块链新闻

比特币新闻 — 区块链新闻

区块链新闻,比特币行情,比特币价格分析,数字货币新闻资讯