Binance Research, the market analysis arm of global cryptocurrency exchange Binance, has released a report analyzing cryptoasset cycles, saying that data on the correlation cycles may support the notion that the cryptomarket has already bottomed out.
Binance Research’s report, titled “Investigating Cryptoasset Cycles,” takes a look at changes in cryptoasset correlations based on market structure and reveals insights on cryptoasset movements in comparison with other major markets.
“High correlation suggests that market sentiment has already found a local maximum during that period, and a trend reversal may possibly ensue,” Binance Research said in the report. “Having emerged from a period of the highest internal correlations in crypto history, the data may support the notion that the cryptomarket has already bottomed out.”
This report also reveals major insights into behaviors of many participants and indicators in the cryptoasset market, and how different they are from the characteristics seen in other major markets around the world.
Among many other findings, the report stated that:
- Price co-movement of cryptoassets is quite high.
- About 7% of cryptoassets are held by institutional investors, compared to the estimated 90% institutional holdings proportion for the U.S. stock market.
- Cryptoassets have turnover rates that are five times higher than that of the U.S. stock market.
“High correlation among cryptoassets can be summed up by an ‘if you can’t beat ‘em, join ‘em’ mentality; during a unilateral trend (late bull or early bear phase), excess returns denominated in USD would become harder to capture, so it becomes easier for market participants to just ride the market waves,” according to the report.
About Binance Research
Binance Research provides professional, data-driven insights and analysis for investors in the crypto space to increase the level of transparency and improve the quality of information within the current crypto ecosystem. The team consists of professionals with a background and experiences in blockchain engineering, investment banking, strategy consulting, academic research and data science. For more information, visit: https://research.binance.com/