A market benchmark is a standard against which the performance of a financial asset, portfolio, or market segment is measured. It provides a reference point for evaluating investment returns or overall market health. Common benchmarks include stock market indices or specific commodity price indicators. In crypto, it serves a similar function for digital asset performance.
Context
In cryptocurrency markets, Bitcoin often serves as a primary market benchmark due to its dominant market capitalization and influence on other digital assets. Analysts compare altcoin performance against Bitcoin or the broader crypto market index to gauge relative strength. The establishment of more sophisticated and diverse crypto benchmarks is a current area of development. These indicators assist investors in assessing market trends and portfolio efficacy.
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