Systematic Risk Beta

Systematic risk, often referred to as beta, represents the inherent risk that affects the entire market or a specific asset class, which cannot be eliminated through diversification. In cryptocurrency, this is primarily driven by global macroeconomic conditions, liquidity cycles, and regulatory sentiment.

Beta measures the sensitivity of an asset or portfolio to these broader market movements. A high beta means the asset will likely experience larger swings in price compared to the overall market.

Understanding beta is crucial for constructing portfolios, as it helps investors determine how much of their return is due to market exposure versus unique asset-specific factors.