Mathijs Kriek (Treecap): Cryptos have low correlation with traditional assets

Mathijs Kriek (Treecap): Cryptos have low correlation with traditional assets

January 31, 2025

Crypto
Mathijs Kriek (Foto archief TreeCap)

This text was originally written in Dutch

By Esther Waal

After Trump's election victory, Bitcoin peaked above $100,000, partly due to his pledge to make the US the ‘crypto capital’ and use Bitcoin as a national reserve. Even before his re-election, crypto's popularity grew, thanks to the approval of the first Bitcoin ETF and increased institutional investment from BlackRock and others. Yet many institutional investors are still left with many questions. Reason enough for Financial Investigator to ask Mathijs Kriek, Portfolio Manager at TreeCap some questions.

To what extent does cryptocurrency correlate with traditional asset classes?

Cryptocurrencies and other digital assets have historically shown very low and, in some cases, even negative correlations with traditional asset classes. This means they can offer an important source of idiosyncratic risk and thus generate smart alpha in diversified investment portfolios. Of course, it remains a dynamic relationship based on market conditions (macro and sentiment) and external factors (think laws and regulations, and technological advances in blockchain).'

How will the crypto market evolve in the coming years?

'I expect Distributed Ledger Technology (DLT) and its underlying digital assets to play a crucial role in the future, especially in areas such as finance (think settlements, collateral management and corporate actions), the tokenisation of various assets, the integration of blockchain into physical infrastructure and even in the development of a renewed internet (web3.0). In addition, I believe AI could function better with the help of blockchain technology. I see two key factors for wider adoption. First, I think clear regulation, with the EU leading the way with MiCAR, could pave the way for entry and participation in digital assets by institutional investors. Second, I expect that cash-on-chain capabilities, such as (regulated) stablecoins or other solutions linked to the traditional payment system, should be further developed and improved. I believe blockchain is changing the way data and value are exchanged and stored, which will lead to greater trust, efficiency and security.'

 

'Cryptocurrencies have historically shown very low correlations with traditional asset classes.'

 

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