How does the Carhart Four Factor Model explain the performance of digital assets in the cryptocurrency market?

1 answers

• Rishabh BanerjeeJul 13, 2025 · 4 months ago
  The Carhart Four Factor Model is a well-known framework used to analyze the performance of digital assets in the cryptocurrency market. It takes into account four key factors: market risk, size, value, and momentum. Market risk refers to the overall volatility and uncertainty in the market, which can significantly impact the performance of digital assets. Size refers to the market capitalization of a digital asset, with larger assets often having more stability and liquidity. Value refers to the intrinsic value of a digital asset, considering factors such as its technology, team, and potential for growth. Momentum refers to the recent price trend of a digital asset, with assets that have shown positive momentum more likely to continue performing well. By considering these factors, the Carhart Four Factor Model provides insights into the performance of digital assets in the cryptocurrency market.
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