Bitcoin is a "Nobel-winning" Asset for Diversification
Bitcoin is a perfect asset for diversification, an Economist piece notes.
The copy states that Bitcoin moves independent of other asset classes—referring to the stock market, bonds, etc.
The observation from the Economist is what other analysts hold of the emerging digital asset with a baked-in deflationary feature. Bitcoin is considered a digital gold that's transparent and whose emission is guided by mathematics. Unlike gold, whose supply isn't known, Bitcoin's is well tabulated and cracked.
The absence of correlation with the traditional market could be because of the digital asset's short history. Bitcoin is the first cryptocurrency launched in 2009. Its impact began to be felt four years later when it found utility, moving value across borders. However, Bitcoin has an established positive correlation with altcoins. Therein, Bitcoin's rally often sparks a sharp expansion in altcoins.
At the same time, there are substantial diversification benefits when an investor adds a small percentage of Bitcoin to a traditional portfolio. This draws directly from Bitcoin's independent price movement, the high correlation of returns, risk-reward profile, and the digital asset's attractiveness as an investment.
It is albeit Bitcoin's relatively high volatility—which has, anyway, been tapering over the years as liquidity builds up and adoption increases.
For more interesting tips and facts visit our Education Centre.
We're available 24/7 to help you. You can email us, or send us a message on WhatsApp, Telegram or Messenger!
This website is not directed at any jurisdiction and is not intended for any use that would be contrary to local law or regulation.
CryptoAltum does not accept any clients under the age of 18.