Editing Bitcoin
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As with any investment, investing in Bitcoin carries a level of risk. Overall, based on the Bitcoin's adjusted beta (i.e. 1.42), the degree of risk associated with an investment in Bitcoin is 'medium'. | As with any investment, investing in Bitcoin carries a level of risk. Overall, based on the Bitcoin's adjusted beta (i.e. 1.42), the degree of risk associated with an investment in Bitcoin is 'medium'. | ||
Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of | Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of 1.5 or more. Further information about the beta ratings can be found in the appendix section of this report. | ||
The key risks can be found below. For us, currently, the biggest risk to the valuation of the currency relates to the strong competition from other cryptocurrencies and traditional financial systems (i.e. competition risk). | The key risks can be found below. For us, currently, the biggest risk to the valuation of the currency relates to the strong competition from other cryptocurrencies and traditional financial systems (i.e. competition risk). |