Despite the sharp declines in Bitcoin and cryptocurrencies, the interest in crypto assets continues to increase compared to other investment instruments.
The Economist, one of the world’s leading economic magazines, stated that crypto assets attract more attention of investors than other assets and crypto assets have more investment advantages.
The historical magazine, which praises Bitcoin, states in its article that Bitcoin’s low correlation with the traditional market makes Bitcoin a potential source of diversification.
In the article that talks about the advantages of Bitcoin, it is stated that the risk, which is the basis of Nobel Prize winner Harry Markowitz’s “Modern Portfolio Theory”, should not actually be an investor’s concern.
Markowitz, saying that all is greater than the sum of its parts; argues that portfolio diversification can reduce volatility without sacrificing profits.
The article states that risky assets will actually contribute to the investment portfolio:
This is where the advantage of Bitcoin lies. Cryptocurrency can be quite volatile, but despite its short life, it has achieved high returns. More importantly, it tends to act independently of other entities.
Since 2018, the correlation between Bitcoin and all stocks in the world is quite weak. This makes Bitcoin a potential source of diversification.”