Citi Predicts Weaker Relationship Between Equities and Crypto Markets
Citi's research report indicates a potential decline in the correlation between stocks and cryptocurrency markets over time. Key points include:
- Equities currently influence crypto markets but this relationship may weaken as the crypto market matures.
- Growth in the investor base, technological advancements, and increased adoption are contributing factors.
- Speculative behavior in cryptocurrencies could inflate risk correlations during downturns.
- A clearer regulatory framework in the U.S. will likely cause more individual price movements.
- Long-term Bitcoin volatility is expected to decrease due to rising institutional adoption.
- Crypto's market cap as a percentage of U.S. equities increased last year.
- Bitcoin's correlation with gold may indicate its potential as a "store of value."