Crypto Perspective

When it comes to innovation and change, humanity in general has a tendency to want to think of the new in terms of the old. While this is understandable as the old is familiar and serves as a useful analytical springboard, it is also harmful; as we automatically attempt to shoehorn the new into frameworks that are not suitable for it.

Is this the case with Crypto?

Crypto Perspective 4: Inflation Hedge?

Crypto does not fit neatly into mainstream categorizations

Having seen how BTC’s correlation to inflation has changed over time, how about Gold and inflation?

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Crypto Perspective 5: Uncorrelated Asset?

Crypto does not fit neatly into mainstream categorizations

What is an uncorrelated asset? Quite simply, assets are uncorrelated if changes in one’s returns don’t affect the other. Perfectly uncorrelated assets have a correlation coefficient of 0, and, from an asset management perspective, are important because they allow money managers to diversify their portfolios effectively. Which is where Cryptocurrencies supposedly come in.

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Crypto Perspective 6: Uncorrelated Asset?

Crypto does not fit neatly into mainstream categorizations

When markets crash, they tend to crash together, with all assets moving in tandem. In this sense, a “true” test of just how uncorrelated an asset can be is whether its price moves in lockstep with other markets during times of panic.

How does BTC fare in this regard?

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Crypto Perspective 7: Is It A Currency?

Crypto does not fit neatly into mainstream categorizations

Arguably the biggest criticism Cryptocurrencies get is that they aren’t actually, well, “currencies”. At least, they aren’t “currencies” in the mainstream’s perception; which, of course, begs the question, what is a currency, and where do Cryptos fit?

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Crypto Perspective 8: Is It A Currency?

Crypto does not fit neatly into mainstream categorizations

While adoption isn’t widespread enough for them to be used in daily transactions like purchasing groceries, Cryptocurrencies are used by community members (not all of whom need to be diehard believers/evangelists) for transactions between themselves.

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Get a different perspective on all things trading & investing every week!