For many years, cryptocurrencies have been relatively unaffected by traditional equity, fixed income, and commodity market movements, thanks to the relative size of the market.
Over time, the theory has emerged that Bitcoin will be a convenient hedge against inflation, thanks to the 21 million supply cap, which creates a shortage as demand grows.
However, according to Bloomberg data, Bitcoin is more correlated with NASDAQ than at any time since 2010, and its index suffers from higher prices and higher interest rate declines.
Cryptocurrency exchange FTX founder Billionaire SamBankman-Fried says the correlation will probably continue as macroeconomic conditions dominate investor sentiment.
“The crypto market is almost stable no matter what happens in the traditional market,” Bankman Fried said. luck On weekends, we refer to a mathematical operation called “modulo” that shows the relationship between two numbers.
“Therefore, if inventories recover, we can expect the same with cryptocurrencies. If stocks continue to plunge, so may BTC.”
Equity investors are also preparing for long-term volatility due to the threat of a US-based recession.
At present, we are aware of the global macroeconomic situation, such as raising the US policy rate, supply chain problems, chip shortages, soaring oil prices, and soaring inflation rates in developed countries.
“The Holy Grail of Cryptoble is the day when Crypto is cut off from the declining stock market,” said Brent Donnelly, president of Forex Trading Publishing Spectra Markets.
“On the other hand, the worst scenario in the short term is that Nasdaq finds a base and cryptocurrencies continue to fall.”
Over the last decade, there have been two major crashes that have resulted in what is known as “crypto winter.”
The first was in 2014, when Bitcoin fell from a peak of $ 1137 to $ 183, down 84%. This is also due to the collapse of Mt. Gox, a widely used exchange.
Second, at the end of 2017, the first coin offering, an unregulated way to raise money to build crypto projects, flooded Bitcoin with hundreds of millions of dollars. The vibrancy has collapsed to a low of $ 3181 by 2018 after pushing Bitcoin’s price to a peak of $ 19,650.
Last week, the collapse of terraUSD, the third most widely used stablecoin, prompted a dramatic revaluation of crypto prices and marked the beginning of a period in which the technological risks inherent in crypto investments were more considered. rice field.
However, Michael Gronager, co-founder and CEO of Chainalysis, the world’s largest cryptographic data analysis company, said: Down period is convenient Distinguish between signal and noise.
“It’s during these bear markets that great new technologies are developed,” Gronger said.
“I’ve seen people get excited about new technology and suddenly everyone wants to access it, but it’s not as good as people want. And with some disappointment, true innovation is born. Is when the bear market has arrived and the company is running out of money. “