- Coinbase Research reveals a 50% correlation between crypto and stock markets, driven by global monetary easing policies.
- Ethereum outperforms Bitcoin amid growing correlation, while layer 0, gaming and scaling solutions attract strong investor interest.
Recent data from Coinbase Research reveals a significant change in the crypto market: in September 2024, the link between crypto and stock markets is hovering around 50% and reaching an unprecedented high point in history.
Global monetary easing programs in China and the United States are primarily fueling this closer link between the two financial environments. Such economic policies have not only made these markets more linked, but also revealed possible opportunities and difficulties for investors trading these closely linked financial sectors.
Especially as Bitcoin climbed past the $64,000 mark and other crypto-related stocks, such as Coinbase (COIN) and MicroStrategy (MSTR), the sync between crypto and stocks marks a notable change.
How Crypto Events and Federal Policies Shape Market Correlations
Some notable events in the crypto industry, including the Solana Breakpoint conference in Singapore and the TOKEN2049 event in Singapore, follow this growing link.
These developments coincided with the Federal Reserve’s aggressive interest rate policy strategy, whereby a 50 basis point rate cut caused favorable reactions in the stock and crypto markets.
US market futures and crypto stocks rose in unison, as much US stocks reached unprecedented heights. Bloomberg statistics confirmed this trend by reporting that the 40-day correlation coefficient between the top 100 cryptocurrencies and the S&P 500 rose to 0.67.
At 0.72, the last time this coefficient reached such high levels, it indicates that traditional finance and crypto-finance are increasingly linked.
Caroline Mauron, co-founder of Orbit Markets, clarified the macroeconomic causes of this trend. She pointed out that because the Federal Reserve is maintaining its easing cycle, these macroeconomic factors are currently guiding crypto stocks and will likely continue to do so.
This represents a major change from the past since cryptocurrencies mostly operated independently of traditional financial markets. The crypto market is becoming increasingly responsive to global economic policies as its sensitivity to broader macroeconomic conditions grows.
Ethereum Overtakes Bitcoin as Investors Explore New Opportunities
With an increase of 8% compared to Bitcoin In the week following the Federal Reserve’s decision, Ethereum far surpassed Bitcoin in this growing correlation. Reflecting the changing characteristics of the crypto market, this move suggests a growing curiosity about altcoins among investors.
Still, Ethereum’s recent success raises some questions. The Ethereum Foundation’s recent sale of 100 ETH, which helps explain their overall sales of 3,566 ETH this year, raises questions regarding the possible influence on market sentiment and the broader Ethereum ecosystem.
Additionally, the top performers with growth of 9%, 17%, and 11%, respectively, over the past week are Layer 0, Gaming, and Scaling solutions. These events show that investors are seeking prospects in other crypto assets that have proven their sustainability and growth potential, expanding their interests outside of Bitcoin and Ethereum.
October, a generally favorable month for cryptocurrencies, is approaching and the market is preparing for perhaps significant performances.
Given that Bitcoin has shown a positive increase in eight of the last ten months as of October, it is speculated that this trend could persist, especially with the current increase in institutional involvement.
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