A research paper published by Coinbase said “a wider range” of investors wanted increasing exposure to the crypto sector last year: many of them sought access to new products such as exchange-traded funds (ETFs) backed by the Bitcoin (BTC), decentralized finance (DeFi) and non-fungible tokens (NFT).
In the report entitled 2021 Year in Review, produced by the institutional arm of Coinbase, the exchange said it has seen significant diversification of institutional customers in the past year, “beyond asset managers and financial services companies.” He also said that many of his existing clients want broader exposure to crypto beyond Bitcoin, which “reflects the growing number of crypto uses.”
And while Bitcoin remained the primary asset for clients seeking cryptocurrency exposure, Coinbase noted that 2021 was a much weaker year for Bitcoin than 2020, with a 58% return in 2021 versus 300% the year. former.
According to the report, this less dynamic performance in 2021 can be mainly attributed to three factors:
- the withdrawal of fiscal and monetary stimulus measures related to the COVID-10 pandemic worldwide;
- the weakening of price support due to the Bitcoin halving in May 2020;
- the maturity of cryptocurrencies as an asset class.
Furthermore – and contrary to what other experts have claimed recently – the exchange described Bitcoin’s correlation with other financial assets as “low”, although it added that it is now “higher than the previous years.”
“Over the previous 12-month window, BTC recorded correlation coefficients of 27.4% with the S&P 500, -3.5% with the US core global bond index, almost zero with gold and 25.6% with the MSCI EM [marchés émergents]“, says the report.
Commenting on the performance of Ethereum (ETH) over the past year, Coinbase said the asset has made “significant gains against BTC” as “the ETH/BTC currency pair hit all-time highs in early December before falling.”
“We believe this reflects positive sentiment towards the broader cryptocurrency ecosystem as ETH outperformed in both rallies and selloffs,” the report said.
He adds that “while BTC arguably remains a ‘store of value'”, ETH’s performance over the past year has been boosted by continued growth in DeFi, decentralized applications (dapps), gambling and NFT market.
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