Although Bitcoin is no longer a medium of exchange, the past decade has shown that the world's first and most dominant cryptocurrency is a very robust long-term asset despite its volatility. As a store of value, and in light of increased regulatory clarity around cryptocurrencies and the digital asset market, Bitcon's investment thesis is highly valued.
While Bitcoin's progress in normalizing cryptography is mostly a positive story, suspicion and skepticism still exists about the role of cryptography in the changing world of finance. A recent study titled "Dissecting Exposures to Variable Risks Over Time in the Cryptocurrency Markets" is trying to understand how true Bitcoin's claim as a new asset class is and how it performs relative to traditional assets. The document cites concerns about the usefulness of Bitcoin as a safe haven asset and argues that,
" Bitcoin is not correlated with the majority of fiat currencies and is much more volatile, therefore being of limited use for risk management and diversification purposes."
However, the document noted that while the predominant narrative of Bitcoin as a safe haven may not be entirely grounded in reality, there are opportunities for investors in the digital asset markets, it noted that ,
"There are significant and persistent arbitrage opportunities in cryptocurrency trading against fiat currencies in different markets, and the fact that the dynamics of cryptocurrency returns are mainly driven by investors who" speculate "
Even though adoption has grown steadily, Bitcoin is still considered a purely speculative asset despite the different use cases it has presented and its ability to maintain value. According to bias market data, the Bitcoin - S&P 500 index has risen from 14% to over 33% in recent weeks.
The study concludes that for the moment the cryptography market is not systematically exposed to stock market factors and that it represents a new asset class, significantly differentiated from traditional asset classes. Highlighting the main differences noted, the study pointed out,
“Cryptocurrency appears to be characterized by returns that are less predictable on average compared to other asset classes, including gold and the trade-weighted US dollar.”
However, in the case of the crypto market, especially with regard to Bitcoin , the benefits of portfolio diversification may outweigh the returns, as investors' current risk aversion is likely to worsen. maintain.