A benchmark is a reference point used in performance analysis to compare different assets.
Understanding the Term
A benchmark is defined as a baseline or a reference point in comparisons based on various criteria. Often used in the financial industry for both traditional and crypto markets, a benchmark is used to determine the performance of assets and investment portfolios.
There are many forms of benchmarks, among which the most popular are the so-called indexes, which are basically financial instruments used to represent a group of individual market prices or a collection of data points.
A benchmark is usually set at the estimated most productive practice or against the performance of other successful assets.