In this post:
- Research and insights from Coinbase show a strong correlation between the cryptocurrency and stock markets.
- The Coinbase study also shows that a roughly 50% correlation is being caused by global easing initiatives in the US and China.
- According to the observations, the current trajectory points to October being a strong month for the markets.
According to a recent Coinbase study, the relationship between cryptocurrencies and stock markets is at an alltime high in September.The study also showed that the global easing policies implemented by the United States and China are mostly to blame for the rising correlation, which is currently close to 50%.
The report comes after a few major events in the crypto community went down, including the TOKEN2049 event in Singapore and the Solana Breakpoint conference. The Federal Reserve also decided upon an aggressive approach to the interest rate cuts, applying a 50-basis-point rate cut.
The Fed’s decision during the Federal Open Market Committee meeting positively affected both crypto and stock markets. Bitcoin rose significantly, crossing the $64,000 mark. Additionally, crypto-related stocks rose, including Coinbase’s COIN and Microstrategy’s MSTR.
Data from Bloomberg showed that U.S. equity futures were in tandem with crypto prices this week. Several U.S. stocks rose, with some reaching new all-time highs. Stocks notably suffered losses after the Kamala Harris—Donald Trump presidential debate.
Bloomberg data also indicated that the 40-day correlation coefficient gauging the S&P 500 and the top 100 cryptocurrencies hit 0.67. The data further revealed that the last time the coefficient hit such highs was in 2022, at 0.72.
Macroeconomic factors fuel the correlation
Orbit Markets co-founder Caroline Mauron revealed that recent economic news has significantly impacted traditional and digital markets. Likewise, there is major speculation that several macroeconomic events are increasing the current correlation between stocks and crypto. Traders are also expected to ride the monetary easing wave speculated to come after the Fed’s rate cut decision.
“Macro factors are driving crypto prices currently, and this should continue throughout the Fed’s easing cycle, unless we see a crypto-specific black swan event.”
Macroeconomic conditions previously did not affect crypto markets, reducing their correlation with equity markets. Data shows that increased maturity in crypto markets led to macroeconomic factors affecting their price performance. The current factors, according to Coinbase, speculated that the markets had the perfect conditions to begin a good month in October. Crypto has historically performed well during October as compared to September.
Coinbase discusses Ethereum surpassing Bitcoin in performance.Ethereum has been outperforming Bitcoin throughout the increased correlation, according to Coinbase analysis.The study’s findings indicated that in the week following the Fed’s announcement, ETH outperformed BTC by 8%.As of this writing, ETH has gained 6.08% over the last seven days, outpacing BTC, which has gained 4.77%.
On the other hand, there is disapproval of the Ethereum blockchain and growing misgivings over the Ethereum Foundation.The foundation sold 100 ETH, according to Lookonchain data, increasing its total ETH sales for the year to 3,566 ETH. In response, one X user stated they were watching to see how sales affected development initiatives and market sentiment.
The study also noted that there is a growing interest among investors, with many skyrocketing, including memecoins like Shiba Inu and PEPE. The research noted that several sectors, including Layer 0, gaming, and scaling solutions, have been the best performers. The sectors gained 9%, 17%, and 11%, respectively, in the past week.
