In years gone by, such jitters would have barely shaken Bitcoin and other major cryptocurrencies, which are often touted as independent hedges against the roil of standard equities, operating away from the gaze of regulators, banks and stuffy fund managers with their carefully balanced portfolios.Richard Galvin
Data compiled by Bloomberg shows that over the last 40 days, the correlation coefficient between Bitcoin and the Nasdaq 100 nearly reached 0.66, the highest level of correlation since 2010, indicating the two often move in the same direction.This recent coupling is representative of the cryptocurrency entering its next ‘phase’ as an asset, according to Adrian Przelozny, co-founder of major Australian crypto exchange Independent Reserve.
early Bitcoin investors would have only been investing in crypto, rather than current investors who likely have a range of stocks and assets in their portfolios. These fund managers applying their existing pricing models to cryptocurrency assets have driven some correlation between the two. The linkage is also driven by the global appetite for risk, Galvin says, as crypto assets tend to thrive in a frothy market where investors are hungry for growth, rather than the subdued, cautious approach taken by many currently.
“If we look 50 years out, and if the adoption curves eases off, it becomes much more of a gold-like asset,” he says.
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