Digital Asset Outlook 2022
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Theme 1. Digital Asset Economy
Digital asset in portfolio construction
According to Fidelity Digital Assets, a survey revealed that 70% of global institutional investors plan to invest in digital assets within the next five years.
Figure 11. Digital asset as an asset class in portfolio construction Characteristics
How to measure
Significance
Trend over time
High potential return
The difference between the potential appreciation in the price and the cost price
Increasing use cases and higher mainstream penetration
Digital assets have massive upside as it is still in the early stage of development, and professional investors have yet to allocate to the space.
High liquidity
The trading volume over a certain period
Easier for investors to trade with minimal price risk
The liquidity is expected to increase over time and can attract more investors gradually
The standard deviations of returns
High volatility limits institutional adoption
Volatility is declining but is expected to persist in the future.
The degree to which price moves are correlated with other traditional assets
Market-specific dynamics and investor flows influence returns and correlations.
Correlations are unlikely to rise substantially, given the different return drivers, making cryptoassets a popular means of diversification.
High volatility
Low correlation with traditional assets
Source: CFA Cryptoassets report
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