Coinbase points to parallels in the risk profiles of Bitcoin, oil, and Tesla stock

Digital assets, in terms of price behavior, are closer to oil and gas or to tech and pharmaceutical stocks. Coinbase reached this conclusion.

In times of stock and crypto market volatility, it is important to understand how market efficiency drives the ups and downs. Tl;dr: movement in crypto reflects its place in the markets, much like oil prices & tech stocks. My latest blog: https://t.co/5aQjwa1Fqy (1/5)

— Cesare Fracassi (@CesareFracassi) July 5, 2022

The chief economist at the Bitcoin exchange Cesare Fracassi noted an increasing correlation between cryptocurrencies and stocks since the 2020 pandemic. Previously, this link was not evident, he added.

The expert reminded that in Coinbase’s previous report, Bitcoin and Ethereum daily volatility values were close to those of natural gas and crude oil (roughly 4-5%). By comparison, gold and silver have similar parameters of about 1-2%.

According to the economist, rather than precious metals, a comparison of Bitcoin with Tesla stock is more appropriate in terms of volatility and market capitalization. For Ethereum — with shares of another EV maker, Lucid Motors, or with the pharmaceutical company Moderna.

“The market expects that digital assets will become more intertwined with the rest of the financial system. They will be influenced by the same macroeconomic forces that move the global economy.”, he said.

According to the expert, about two-thirds of the decline in cryptocurrency prices from the ATH can be linked to the impact of rising interest rates. Only a third is explained by factors inherent to digital assets.

Earlier, Jeffrey Gundlach, the head of DoubleLine Capital, suggested that Bitcoin could fall to $10,000 due to tighter monetary policy.

Guggenheim Partners did not rule out a drop to $8000, mentioning the same reason.

Earlier, in Deutsche Bank, they forecast Bitcoin’s return to $28,000 thanks to a rebound in the stock market.

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