Covid-19 has disrupted economies around the world and made cryptocurrencies more attractive. Recent studies have shown that digital coins, such as Bitcoin and Ethereum, offer important diversification benefits. Even in times of economic turmoil, they are beneficial to hold. Here is a look at the key benefits and challenges in the post-pandemic period.
According to a study conducted at the University of Bath, investors will benefit from diversifying their portfolios with cryptocurrencies. The researchers (Xinyu Huang, Weihao Han, David Newton, Emmanouil Platanakis, Dimitrios Stafylas, and Charles Sutcliffe) grouped popular coins into nine portfolios with equal weight. The segmentation was based on the blockchain algorithm type. 553 coins were evaluated in total, including minable ones like Bitcoin and Ethereum (proof-of-work) and more energy-efficient proof-of-stake coins.