It seems that what began in 2009 as an innovative currency solution merely became a hot asset class that draws capital every day. When digital assets first appeared, they were out of touch with traditional assets, but as they become more mature now with crypto adoption on the rise, they begin to move in sync with traditional markets.
With the total market capitalization of crypto assets having exploded from a little more than $20 billion in January 2017 to almost $2 trillion currently, investors and regulators are scratching their heads trying to understand how they fit into established market models.
There has been a lot of money flowing into crypto from traditional markets these past couple years. During that time, traditional markets and cryptocurrency markets converged. As a risky asset, crypto was logically classified alongside stocks. It is evident from various indicators that tech stocks and Bitcoin are strongly correlated at this point.
Therefore, factors affecting stocks like the Fed’s policy tightening, soaring inflation, and high unemployment also…
