Definition ∞ ‘Risk-On Assets’ are financial instruments or asset classes that tend to perform well during periods of economic expansion and investor optimism, but are more susceptible to losses during economic downturns or periods of uncertainty. These assets are typically characterized by higher volatility and potential for greater returns compared to safer investments. In the digital asset space, cryptocurrencies, particularly altcoins and speculative tokens, are often categorized as risk-on assets. Their performance is closely watched as an indicator of broader market sentiment and investor risk appetite.
Context ∞ The current sentiment surrounding risk-on assets is heavily influenced by global macroeconomic indicators, such as inflation rates, interest rate policies, and geopolitical stability. Discussions frequently center on whether the current market environment favors risk-on or risk-off behavior among investors. The correlation between traditional risk assets and digital assets is also a key area of analysis, as market participants assess the broader implications for portfolio allocation strategies.
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