This Researcher Shares “Cautionary Note” for Bitcoin Investors


This Researcher Shares “Cautionary Note” for Bitcoin Investors
Contents

No, Bitcoin cannot serve as a viable hedge asset. Recent research, which was conducted by financial expert Dimitrios Koutmos, proves that BTC is susceptible to the same factors as traditional assets, such as stocks and bonds, Business Insider reports.

👉MUST READ

Donald Trump Could Be Responsible for Bitcoin Price Surge

Donald Trump Could Be Responsible for Bitcoin Price Surge

Bitcoin’s stability problem

In order to determine whether Bitcoin is correlated to other assets, Koutmos compared treasury yield, equity indexes, and other data to BTC’s price history (January 2013 – September 2017). It appears that there is a clear link since the Bitcoin price depends on several factors, such as short-term interest rates and stock market sentiment.

Notably, it seems that Bitcoin was susceptible to the above-mentioned factors during the periods of relative stability. It’s all about the timing. The more volatile Bitcoin is, the better it performs as a hedge asset.

👉MUST READ

Forbes: Bitcoin Gets Mature as Asset, Community Less Worried About Frauds Now

Forbes: Bitcoin Gets Mature as Asset, Community Less Worried About Frauds Now

Raining on BTC’s parade

When the stock market got hammered earlier this month due to the ongoing trade war, crypto holders felt ecstatic as Bitcoin had just experienced its third week of consecutive double-digit gains. Overall, Bitcoin is the top-gaining asset of 2019 with its price spiking by more than 100 percent in 2019.

However, Koutmos believes that it could be a ‘cautionary tale’ for investors who entertain the idea of Bitcoin being a ‘unique asset’ that is immune to broader market conditions. If one takes into account the risk-reward ratio, these high returns are still not sufficient enough to mitigate losses.

Cover image via 123rf.com
Subscribe to U.Today on Twitter,and get involved in all top daily crypto news, stories and price predictions!

About the author

Alex Dovbnya (aka AlexMorris) covers all things crypto — from major projects, which are fighting tooth and nail to gain the upper hand in the burgeoning industry, to the latest regulatory trends around the world. When he happens to take a break from crypto, Alex delves into cognitive linguistics (metaphors can be fun too!).

👓 Recommended articles

This site uses cookies for different purposes. Please set your preferences in Cookie Settings and visit our Cookie policy for more information on how and why cookies are used on this site. Click here for cookie policy

Cookie settings