Digital assets are not insulated from the influence of macroeconomic factors, such as tighter monetary policy. CoinDesk writes, citing a Goldman Sachs report.
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The current pullback in the crypto markets suggests that broad adoption could be a double-edged sword. The decline in prices occurred predominantly for reasons unrelated to digital assets, analysts noted.
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Experts attributed it to a fall in shares of low-margin tech firms and recently IPO’d companies. That segment of the stock market proved most sensitive to signals of a forthcoming Federal Reserve rate hike.
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Widespread adoption of cryptocurrencies could raise valuations and, likely, their correlation with other variables in financial markets. This reduces their diversification benefits.
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Experts drew attention to a positive correlation between Bitcoin and inflation-risk indicators and the innovative technology sector. At the same time, they found an inverse price relationship with real interest rates and the value of the U.S. dollar.
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Further development of blockchain technology, notably in the form of metaverses, could over time provide a tailwind for certain digital assets. At the same time they will not be immune to macroeconomic forces, the specialists warned.
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As Bloomberg reports, the correlation between Bitcoin and US tech-sector shares reached an all-time high.
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In January the IMF warned of risks of “contagion” to stock and Bitcoin markets.
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Earlier, MSCI reported a growing influence of cryptocurrencies on the dynamics of equity portfolios.
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