The crypto market is increasingly correlated to the stock market, and institutional investors appear to have heightened that correlation. And when the stock market goes down, it takes crypto with it HeleneBraunn reports.
Not only were these institutional investors a sign of growing mainstream acceptance, they also appeared to drive up prices. Crypto boomed with the sector’s market capitalization growing 185% that year.
“The influx of institutional interest in BTC, which started to pick up in early 2020 with public declarations of interest from stalwarts of traditional investing, such as Paul Tudor Jones and Renaissance Technologies, coincides with a sustained jump in the 60-day correlation between BTC and the S&P 500,” according to anThe three-month correlation between bitcoin and ether and the major U.S.
The S&P 500 and the Nasdaq both dropped nearly 5% the day after the meeting on May 4. Bitcoin fell over 10%, now down over 35% year to date. For market watchers, the upshot was how closely they're traveling in tandem. So does that mean that those institutional investors who helped crypto to flourish a year ago are now a factor in the crash?
“This is the nature of tradable assets,” he said. “When assets are sold, all assets are sold. Bitcoin has correlated with the Nasdaq for quite a while now. This is no exception.”
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