Definition ∞ ‘Alpha’ refers to an investment’s excess return over a benchmark index. It signifies performance that surpasses what would be expected based solely on market risk. This excess return is often attributed to the skill of the portfolio manager or unique market insights. Identifying and generating alpha is a primary objective for many sophisticated investment strategies within the digital asset space.
Context ∞ Discussions around alpha in cryptocurrency often center on active trading strategies, yield farming protocols, and early-stage project identification. The nascent nature of digital asset markets presents opportunities for generating alpha, but also introduces heightened volatility and unique risk factors. Analysts closely monitor how different investment vehicles and strategies achieve alpha, especially in light of evolving regulatory landscapes and technological advancements.
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