Morningstar - Q3 2022 - 33

EXHIBIT 2
Unique Behavior The crypto market's price returns have had low correlations to other asset classes.
Correlation of Returns, 2015-22
1
1 MVIS CryptoCompare DA 100 PR
2 Russell 1000 TR
3 Russell 2500 TR
4 MSCI EAFE NR
5 MSCI EM NR
6 FTSE Nareit Equity REITs TR
7 Bloomberg US Agg Bond TR
8 Bloomberg US Corporate High Yield TR
9 Bloomberg US Treasury US TIPS TR
10 Bloomberg Gbl Agg Ex USD TR
11 JPM EMBI Global TR
12 DJ Cmmdty TR
13 DJ Cmmdty Energy TR
14 FTSE Treasury Bill 3 Mon
Source: Morningstar Direct. Data as of 05/31/2022.
1.00
0.25
0.20
0.30
0.24
0.21
0.15
0.21
0.20
0.20
0.25
0.07
0.02
1.00
0.93
0.88
0.73
0.76
0.16
0.78
0.35
0.33
0.62
0.40
0.40
2
3
4
5
6
7
8
9
10
11
1.00
0.84
0.72
0.73
0.09
0.81
0.28
0.27
0.59
0.48
0.51
1.00
0.80
0.66
0.13
0.78
0.28
0.39
0.65
0.47
0.48
0.76 to 1.00
0.51 to 0.75
0.26 to 0.50
0.01 to 0.25
1.00
0.53
0.19
0.76
0.33
0.54
0.67
0.47
0.39
1.00
0.28
0.66
0.47
0.34
0.61
1.00
0.33
0.81
0.69
0.57
0.35 -0.26
0.34 -0.25
-0.12 -0.06 -0.10 -0.08 -0.06 -0.08
12
13
0.00 to -0.24
-0.25 to -0.49
-0.50 to -0.74
-0.75 to -1.00
14
1.00
0.46
0.47
0.83
0.50
0.29 -0.03
1.00
0.67
0.57
0.00
0.55 -0.06
0.09
1.00
0.67
0.11
0.00
0.06
1.00
0.33
0.37
1.00
0.90
1.00
0.03 -0.22 -0.15
1.00
With so much diversity, it's probably simpler
to think about digital assets as a technological
landscape, rather than a basket of tightly
correlated investments. Blockchains serve as the
foundation on which a specific digital economy
runs, and cryptocurrencies unlock the ability
to transact within that digital economy. The price
of each cryptocurrency resembles a supply/
demand equation, a byproduct of the demand for
its tokens and the supply of that cryptocurrency's
individual coins issued to trade.
Too Big to Ignore
The growth in cryptocurrencies over the past seven
years is staggering. The market capitalization
of the asset class exploded from about $5.2 billion
for the top 100 coins in January 2015 to
nearly $1.4 trillion as of May 2022. At one point,
cryptocurrencies represented the fourth
most popular type of investment, behind only
stocks, mutual funds, and bonds. Bitcoin
alone has a market cap that would rank in the top
10 largest companies in the S&P 500.
Unsurprisingly, bitcoin accounts for most of
that growth. From January 2015 (when
regular pricing data begins) through December
2016, bitcoin consistently took up 80% or
more of the market share among the top 100
cryptocurrencies. But bitcoin has lost
market share to several upstart currencies in
recent years. From January 2017 through January
2022, a market-cap-weighted index of the
100 next largest cryptocurrencies outperformed
bitcoin by more than 75 percentage points
Digital currency e-gold introduced.
Precrypto
1995
1996
Chaum's company
DigiCash creates the
first private electronic
cash system.
1998
Digital currency b-money introduced.
2007
Global financial crisis begins.
33
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