Cryptocurrencies such as Bitcoin (BTC) are considered to be the investment instruments with the lowest correlation with traditional assets. According to the discourse of Pantera Capital, one of the largest investment companies in the crypto money field, this situation stems from the fact that investors have the opportunity to diversify their portfolios.
Traditional assets are not korean with Bitcoin
Dan Morehead, Pantera Capital CEO, said that the relationship between the Bitcoin and Blockchain ecosystem with other asset classes is almost zero. While sharing the three-year weekly returns of Bitcoin with the shared chart, it was proved that the leading crypto asset is not correlated with traditional assets such as stock indices, commodities, etc.
According to Morehead, there was little correlation between traditional assets such as bonds, fiat currencies, commodities in the 1980s, but investors saw the potential of diversifying the portfolio over time and turned to different portfolios.
In the past, bond investors had only bonds. Equity investors were also not interested in any other investment instrument. Those who traded oil only traded oil and did not move to another field. Such examples can be reproduced. Modern investors, on the other hand, set a different strategy and went to keep their portfolios as wide as possible. Ironically, almost all of them bought similar portfolios. Investment products such as the Goldman Sachs Commodity Index increased the correlation effect between assets that had acted quite differently from each other.
With the emergence of assets in the Bitcoin and other Blockchain ecosystem, both individual and corporate investors took a breath. Rather than just protecting their wealth somehow in times of major crisis, investors earned more than reasonable returns. Having assets that grew by 235 percent over the past five years and were basically unrelated to any other assets, was seen as an invaluable opportunity for every investor, and interest in Bitcoin and other crypto assets began to increase.