Crypto Sector Correlations Retreat From Highs as Grayscale Says Bitcoin Explains Only About 50% of Return Variance

Odaily reports: Grayscale has released a research report noting that over the past three years, Bitcoin price movements have explained only about 50% of the return variance across crypto market sectors, with the remainder driven more by sector-specific and asset-specific factors, and correlations between sectors have also retreated from previous highs. Bitcoin's realized volatility over the past year was approximately 43%, while the crypto payments sector had an annualized volatility of 49% and the AI sector 85%. Grayscale stated that as the crypto market matures, investors are expected to achieve more diversified sources of returns by allocating across different sectors and assets, but declining correlations do not mean investment risk is reduced.