The connection between shares and crypto markets is more likely to weaken sooner or later, Wall Avenue financial institution Citi (C) stated in a analysis report Monday.
Whereas equities have been and stay crucial macro driver of crypto markets, the “equity-crypto correlation is more likely to fall over time because the nascent asset class matures, the investor base grows, know-how advances and adoption progresses,” the report stated.
Nonetheless, the speculative nature of cryptocurrency markets signifies that danger asset correlations could also be inflated, particularly throughout risk-off occasions, the financial institution stated.
“A extra clear regulatory regime within the U.S. may even result in extra idiosyncratic value motion,” analysts led by Alex Saunders wrote.
Bitcoin (BTC) volatility is predicted to proceed to fall in the long run as institutional adoption grows, the financial institution stated.
Citi famous that crypto was the one asset class whose market cap, as a share of U.S. equities, grew throughout final yr.
Bitcoin’s correlation to gold can be value monitoring as it could be an early signal of the “retailer of worth use case,” the report added.
Learn extra: Bitcoin’s Outlook Is Bullish With Costs Anticipated to Stay Elevated: Deutsche Financial institution
