Krypto: Confirmed Casino | Finance times

Do you remember as a retail broker and asset manager in crypto?

known Tesla bulls at Gerber Kawasaki reached the highlight of the Bitcoin Prize in early 2021. Wisdom Tree and Ritholtz Wealth Management When they merged at the end of last year to create a crypto index, may have put the entire market at the top. Then the US assets administrative giant Fidelity jumped on the train last April when Bitcoin decreased by almost 20 percent in the course of the year, but was still traded over $ 35,000. Since then it has fallen under $ 21,000.

These institutions have probably decided to give people their retirement allowance because of the potential diversification advantages in cryptocurrency Yolo.

But a current study by the Swiss Finance Institute leaves this bubble. An academic couple-Luciano Somoza and Antoine Didisheim from the University of Lausanne-analyzed data from a random sample of Swissquote customers, one of the few regulated banks that also offer crypto trade services. Of the 77,364 active accounts they examined, about 21 percent acted with cryptocurrency.

Your results help to explain why the correlation between the S&P 500 and the Bitcoin prices looks like this:

In short, they argue that cryptocurrency and share prices have been severely correlated because risky retail customers have traded shares and cryptocurrencies together.

The scientists found that the trend “suddenly” began in the early days of pandemic in 2020 when the correlation between Bitcoin and the S&P 500 jumped from zero to almost 60 percent.

somoza and Didisheim attribute this to the stimulus checks of the retailers-although Alphaville cannot help but realize that the leap in retail happened exactly when the usual arenas of the players were limited, the casinos were closed and most of the sporting events were canceled.

Regardless of the reason, the crypto dealers recorded by the survey seem to be gambling:

. . . When we look at the shares that are preferred by agents that hold cryptocurrencies, we observe a strong preference for growth stocks and speculative assets. When agents open a cryptocurrency wallet, their overall portfolio becomes more risky, with higher annualized returns, which is at the expense of volatility that adds to a significantly lower Sharpe ratio (-10.23 percent).

The scientists also found that the shares preferred by crypto dealers tend to correlate the most with the crypto prices. So these investors either buy crypto and speculative shares at once or sell both at once.

When these dealers opened crypto money exchanges, they started checking their broker accounts much more frequently.

It is also entertaining that these investors acted less frequently when they opened a crypto wallet, so that the performance of their non-crypto portfolios improved.

If we naturally assume that 1) Frequent trading is bad for the performance of a single investor and 2) people who long for pressing a small financial risk button open up a cryptocurrency account, this result makes sense. If investors receive their volatility correction from crypto, it is less necessary for Yolo Puts to sell on Gamestop.

In other words:

in other words

cryptocurrency investors act on average more shares, but less after opening a cryptovallet. This effect is neither caused by the relatively lower weighting of the shares in the portfolio nor by the amount invested, since the dependent variable is scaled by the stock stocks. A possible interpretation is that investors pay less attention if they act with cryptocurrencies and therefore act less often. This result could explain some of the higher Sharpe Ratios [in their stock portfolios.] In addition, we find that trading with shares correlates with the trade in cryptocurrencies. In other words, as soon as you open a wallet, investors act with fewer stocks and at the same time with cryptocurrencies.

These retailers therefore take risks. But it is possible that you just have more money to play, right?

Well, the data "indicate that crypto -oriented private investors are poorer, younger, male, active and risk -friendly," the authors write.

You could say it remained poor .