Beta

Beta is a measure of an asset's volatility or systematic risk in relation to the overall market. A beta of one means the asset tends to move in lockstep with the market.

A beta greater than one indicates the asset is more volatile than the market, while a beta less than one suggests it is less volatile. In the crypto space, many assets exhibit high beta, meaning they amplify the moves of broader market indices.

Understanding an asset's beta is crucial for portfolio construction and hedging. It helps traders determine how much systematic risk they are exposed to.

By adjusting the beta of a portfolio, traders can align their exposure with their risk tolerance. It is a fundamental concept in the capital asset pricing model.