Risks and Features of Digital Assets
Question #17 (correct answer from Answer key is C), wouldn’t A (high correlation with traditional equity markets) be the bigger risk? If digital assets move closely with equities, wouldn’t that make them less useful for diversification, which is supposed to be a benefit? I don’t see how B (regulatory uncertainty) is a more specific risk since all investments have some kind of regulatory exposure. I mean I get it that digital assets have higher regulatory risk, but I do not understand why A would not also be a big risk.
Question #17 (correct answer from Answer key is C), wouldn’t A (high correlation with traditional equity markets) be the bigger risk? If digital assets move closely with equities, wouldn’t that make them less useful for diversification, which is supposed to be a benefit? I don’t see how B (regulatory uncertainty) is a more specific risk since all investments have some kind of regulatory exposure. I mean I get it that digital assets have higher regulatory risk, but I do not understand why A would not also be a big risk.