Grayscale Research: Bitcoin explains only about 50% of the variation in returns across crypto sectors.
Grayscale notes that over the past three years, changes in Bitcoin’s price have explained only about 50% of the variation in returns across crypto market sectors. The rest is driven more by sector-specific and individual asset factors, while correlations between sectors have also fallen from previous highs. In terms of volatility, Bitcoin’s realized volatility over the past year was about 43%, compared with an annualized 49% for the payments sector and 85% for the AI sector.
· Grayscale believes that as the market matures, investors may be able to access more diversified sources of returns by allocating to different sectors.
· The same report also makes clear that declining correlations do not mean investment risk is lower.
When sectors diverge, would you look first at Bitcoin’s or the AI sector’s volatility?
$BTC
Grayscale notes that over the past three years, changes in Bitcoin’s price have explained only about 50% of the variation in returns across crypto market sectors. The rest is driven more by sector-specific and individual asset factors, while correlations between sectors have also fallen from previous highs. In terms of volatility, Bitcoin’s realized volatility over the past year was about 43%, compared with an annualized 49% for the payments sector and 85% for the AI sector.
· Grayscale believes that as the market matures, investors may be able to access more diversified sources of returns by allocating to different sectors.
· The same report also makes clear that declining correlations do not mean investment risk is lower.
When sectors diverge, would you look first at Bitcoin’s or the AI sector’s volatility?
$BTC
