Cryptocurrency Predictions 2020 – Elon Musk, Bill Gates, John McAfee, Jack Dorsey Views| Simplilearn


Coronavirus plays into the hands of cryptocurrency portfolio managers

  • Cryptocurrency portfolio managers managed to capitalize on market volatility

  • Low correlation with traditional assets allows you to build profitable strategies

  • Internal factors will drive bitcoin’s growth in the long term

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The mid-March stock market crash and the negative oil price plunge earlier this week have severely crippled many client asset managers. But there were also those who managed to take advantage of the situation..

The cryptocurrency market started the year with strong growth and even the collapse at the end of the first quarter failed to affect the long-term prospects of the industry. According to analytics service Messari, the first quarter was the most active for the crypto industry and helped to accumulate a safety cushion for many portfolio managers focused on digital assets. This safety margin helped them survive the roller coaster of the coronavirus pandemic.

Correlation is not so obvious

When the coronavirus stepped outside China and set off to conquer Europe, the stock market rushed down and pulled the cryptocurrency sector with it..

The coronavirus has played into the hands of cryptocurrencies ...

Bitcoin joined the company of outsiders, while traditional defensive assets were rapidly becoming more expensive. Altcoins also gave a deep drawdown, many began to doubt the protective properties of digital assets.
And yet, there is no correlation between cryptocurrencies and traditional financial instruments..

The coronavirus has played into the hands of cryptocurrencies ...

At different times, Bitcoin kept pace with gold and treasury bonds, and then switched to stocks and risky assets. This suggests that its movements are largely driven by internal factors and sentiment and not related to where other asset markets are going..

According to Viktor Pershikov, leading analyst at 8848 Invest, such a low correlation allows cryptocurrency portfolio managers to make money even in the face of massive sales..

“Both in the past and at the beginning of this year, one could observe the growth of certain sectors of the crypto market at a time when classic financial assets either did not grow or declined. Low interconnection of markets allows managers to make money on the growth of assets in their portfolios, even if raw materials, precious metals and company shares do not show similar dynamics, “the expert noted..

Volatility opens up opportunities

High volatility requires strict discipline from asset managers.

The coronavirus has played into the hands of cryptocurrencies ...

However, in the right hands, it becomes a unique tool for maximizing potential income. If you have a competent risk management strategy in volatile markets, you can bring your investment returns to a new level. According to Pershikov, the winners were those who did not panic and did not sell their portfolios when cryptocurrencies flew down. At the end of the month, many coins won back a significant part of losses and entered stable growth..

In addition, in less than a month, the third Bitcoin halving will take place, as a result of which the size of the reward for the mined block will be reduced to 6.75 BTC. Many experts view this event as a bullish factor in the long term. For example, the head of Glaxy Digital, Mike Novogratz, shares this opinion..

Another unconditional factor in the growth of bitcoin in the long term will be the irresponsible monetary policy of the leading central banks. The BeInCrypto editors recently discussed this issue in detail with cryptanalyst and columnist Carl Martin (The Moon).

Thus, portfolio managers focused on cryptocurrency assets, with a competent risk management strategy, are in a better position than traditional funds..


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