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Crypto Market Remains Concentrated

Updated: Sep 9, 2022

Cryptocurrencies represent the fourth-most popular type of investment, behind only stocks, mutual funds, and bonds, says Morningstar’s Equity Research’s ‘Cryptocurrency Landscape’ report. It shows the cryptocurrency market remains highly concentrated, with bitcoin and ether capturing more than 60 per cent of the total market capitalization. In the near term, analysts agree that bitcoin is unlikely to dim gold’s luster. Relative to gold, bitcoin lacks enough outside applications to outweigh the impact of market events on its price, limiting its usefulness as a store of value. As well, based on the return distributions of cryptocurrencies relative to other asset classes, speculative narratives have more influence on cryptocurrency prices in aggregate than the adoption of blockchain technology, making it difficult to identify future outperformers. It says the absence of smart, measured regulation in cryptocurrencies is the key barrier to future adoption, including concerns around price volatility, the lack of fundamental valuations, and regulatory uncertainty.

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