Talking about Bitcoin’s performance is something that many experts have done, especially in 2020. However, this time we’re talking about what Markos Katsanos said on the Binance blog about the correlations of Bitcoin with other cryptosystems and traditional assets.
What’s interesting about this Binance study is how detailed it is, and especially the perspectives it provides for anyone interested in understanding Bitcoin’s performance recently.
Bitcoin (BTC) exceeds $12,000, one step away from 13K?
Correlating Bitcoin with other cryptosystems and traditional assets
Although the report is mainly by Katsanos, Binance does not necessarily absolutely agree with all their conclusions and warns in the same article.
This time Katsanos believes that Bitcoin’s correlations with other cryptomontages are now less than before. Specifically, he believes that as the altcoins mature, they begin to decouple from Bitcoin.
In addition, he estimates that because cryptomontages are much more volatile than conventional assets, the correlation of returns will be weaker. Another interesting fact that can be extracted from this Binance study is that, when designing a regression model to predict a cryptomone based on its correlation with another one, it is better to use daily returns for short-term predictions and asset prices for longer-term predictions.
Finally, another important point highlighted in the article is that the correlation with the stock market has become too strong. The example they give on the blog is that Bitcoin and the S&P 500 have begun to show similar patterns even during intraday trading.
What other interesting things can be extracted from the Binance study?
Nowadays it’s a good idea to have Bitcoin or other crypto currencies in your portfolio, and in this case Bitcoin Lifestyle is repeating it again.
According to the world’s largest exchange, the most compelling argument for owning crypto currencies is the unprecedented expansion of the global money supply, an expansion that has accelerated during the recent pandemic.
This comment has been supported for months, especially since the dramatic increase in public debt in many countries. It has been said that this will sooner or later devalue the purchasing power of fiat currencies.
Moreover, some argue that this will undermine investor confidence in the international monetary system. Consequently, crypto-currencies such as Bitcoin should be able to make a starring appearance.