A chart explains why you should own Bitcoin and other cryptocurrencies

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Last month and a half was a difficult period to be a Bitcoin investor: after seeing its value rise from $ 5,850 at the end of June to almost $ 8,400 on July 24th it was on a slippery track with some short dead rebound and came back to just over $ 6,000.

[Editorenotadell&#39;Author:InvestingincrittografieotokenisALTHAMENTESPECULATIVOeilmercatoèingranpartenonregolatedChiunqueloconsideridovrebbe be ready to lose the entire investment .cryptovalute should be only with a very small percentage of their investable resources.]

[Author’s note: There is no official price for Bitcoin, so I use round numbers and reference Yahoo! Finance data.] [19659003] There are several reasons why Bitcoin and cryptocurrencies (CC) have been under pressure recently ranging from a Hong Kong exchange ng Bitcoin announcing that he had frozen a client's account due to the "start of an unusually large position order (4,168,515 contracts)" which was almost $ 420 million at SEC delay a decision on VanEck's request to list and negotiate SolidX Bitcoin shares.

One reason to own Bitcoin and other cryptocurrencies

However, one reason to own Bitcoin and CC is that they are not correlated with other activities . Investopedia defines the correlation as, "A perfect positive correlation & nbsp; means that the correlation coefficient is exactly 1. This implies that when a security moves, upwards or downwards, the other security moves in steps, in the same direction.A perfect negative correlation means that two goods move in opposite directions, while a zero correlation does not imply any relation. "

While digital currencies should not be considered as a resource in which investors would turn in times of uncertainty, not being related to other asset classes could be useful if markets become very stressed and almost all are sold.

Fundstrat's Alex Kern and Ken Xuan compare Bitcoin and other CCs to other asset classes such as S & amp; P 500, US dollar, international equities, US bonds, commodities, gold and oil. What they have discovered is that there is a very low correlation between Bitcoin and other CCs and almost all of these other asset classes.

In the upper right quarter of the chart below their analysis shows that the closest correlation between Bitcoin and other CCs (depicted as the developed and tracked CryptoFX FS indices) is in adolescents with about half of all comparisons in the individual digits. This means that the price movements of Bitcoin and other CCs are not linked to these other asset classes.

The working document NBER supports the Fundstrat analysis [19659003] The National Bureau of Economic Analysis published a working paper this month which supports the findings of Fundstrat. He compared Bitcoin, Ripple and Ethereum with stocks, currencies, commodities and macroeconomic factors. The 25-page report carried out a detailed economic analysis and found that "cryptocurrency returns may be predicted by specific factors in cryptocurrency markets." Specifically, we establish that there is a strong momentum effect in time series and that proxies for investors' attention strongly predict cryptocurrency yields. "

Their main conclusion was that" only specific factors in the cryptocurrency market – the momentum and proxies for investor attention – consistently explain the changes in cryptocurrency yields This suggests, contrary to popular explanations, that markets do not see cryptocurrencies similar to standard investment classes. "

While both analyzes do not indicate that Bitcoin and CC are useful investments, they show that if an investor wants an asset that is not related to other asset classes that are vehicles to explore.

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One reason to own Bitcoin and other cryptocurrencies

However, one reason for owning Bitcoin and CC is that they are not related to other resources . Investopedia defines the correlation as, "A perfect positive correlation means that the correlation coefficient is exactly 1. This implies that when a security moves, towards the top or the bottom, the other security moves to steps in the same direction: A perfect negative correlation means that two goods move in opposite directions, while a zero correlation does not imply any relation at all. "

Whereas digital currencies should not be thought of as a resource in which investors in times of uncertainty, not being related to other asset classes could be useful if markets are under severe stress and almost all are sold.

Fundstrat's Alex Kern and Ken Xuan compare Bitcoin and other CCs with other asset classes such as the S & P 500, US dollar, international equities, US bonds, commodities, gold and oil. What they have discovered is that there is a very low correlation between Bitcoin and other CCs and almost all of these other asset classes.

In the upper right quarter of the chart below their analysis shows that the closest correlation between Bitcoin and other CCs (depicted as the developed and tracked CryptoFX FS indices) is in adolescents with about half of all comparisons in the individual digits. This means that the price movements of Bitcoin and other CCs are not linked to these other asset classes.

supports the Fundstrat analysis

The National Bureau of Economic Analysis has published a working paper this month that supports the fundstrat discoveries. He compared Bitcoin, Ripple and Ethereum with stocks, currencies, commodities and macroeconomic factors. The 25-page report carried out a detailed economic analysis and found that "cryptocurrency returns may be predicted by specific factors in cryptocurrency markets." Specifically, we establish that there is a strong momentum effect in time series and that proxies for investors' attention strongly predict cryptocurrency yields. "

Their main conclusion was that" only specific factors in the cryptocurrency market – the momentum and proxies for investor attention – consistently explain the changes in cryptocurrency yields: this suggests, contrary to popular explanations, that markets do not see cryptocurrencies similar to standard investment classes. "

While both analyzes do not indicate that Bitcoin and CC are useful investments, they show that if an investor wants an asset that is not related to other asset classes that are vehicles to explore.