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How Does the Correlation of a Token to Bitcoin Affect Its Beta?

High positive correlation to Bitcoin (the market proxy) leads to a high Beta, indicating high sensitivity to systemic market movements.
Greeks.Live17.11.25

How Does the Correlation of a Token to Bitcoin Affect Its Beta?

The correlation of a token to Bitcoin significantly affects its Beta, as Bitcoin is often used as the proxy for the overall crypto market. A token with a high positive correlation to Bitcoin will have a high Beta, indicating it is highly sensitive to general market movements.

Conversely, a low or negative correlation suggests the token is less susceptible to systemic market risk, potentially leading to a lower Beta and a lower risk-adjusted discount rate.

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