These factors are causing a rise in BTC, ETH’s correlation with the stock market

ambcrypto.com:

Going mainstream is not always the best outcome for assets, and cryptocurrencies have lent proof to the same. While a rise in adoption had definitely brought legitimacy and capital to the market, it has also made it susceptible to macroeconomic changes.

This has been highlighted in the rising correlation between cryptocurrency and U.S Stock market prices, which has been a worrying trend for analysts for quite a few years. This was accelerated last month when the U.S Federal Reserve’s hawkish stance and inflation reporting sent both markets tumbling down.

Now, as both asset classes enter a period of stability, these fears have been freshly invoked, especially since a number of announcements are expected to be rolled out by the Fed in the coming week.

Historical data has shown that a positive correlation between stocks and crypto was first noted in 2018 when similar tapering by the Fed had crashed both markets. While stocks fell nearly 20% in the fourth quarter of 2018, Bitcoin fell as much as 50%.

Source: Business Insider

However concerning the trend may have been earlier, its unparalleled acceleration since August 2021 has sent many into a dizzy. Over the past month, Bitcoin has fallen 12% against the dollar, while the S&P has gone down 10%, indicating that the gap between both is narrowing with each crash.

Martin Green, CEO of Cambrian Asset Management noted the same in a recent Forbes interview, highlighting that while the Bitcoin-Nasdaq correlation was 0.2 over the last three years, “in the last several weeks, it has doubled to around point four.” He added,

“There is a higher correlation today than there was six months ago… I would say that recently along the two axis – up and down – Bitcoin and tech stocks are in tandem