Coinbase Shows Crypto Market Performing Similar To Other Traditional Markets


Cryptocurrencies have shown exponential growth over the years, which has led to increased attention in the crypto space. There was no correlation between crypto performance and traditional stocks of different commodities. However, it seems that all of that is starting to fade from the recent activities and trends of digital assets.

The chief economist at Coinbase, a crypto exchange, reported a change in the risk profile of crypto assets. according to Analytics From Cesare Fracassi, the performance of crypto is similar to that of stock commodities. This means that the prices of crypto assets now share the same trend of stocks as pharmaceuticals, oil and gas, technology, etc.

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Fracasie gave his note on July 6 through a blog post. He stressed that the 2020 global pandemic represents an increase in the correlation between digital asset prices and stocks. In his explanation, Fracasi notes that bitcoin returns provide more significant evidence of similarities in trend.

According to his argument, the average returns of BTC over the past decade have not shown any correlation with the performance of the stock market. However, this trend has veered since the onset of the COVID pandemic.

According to Frakasi’s analysis, the current market movement is taking away the crypto assets. Hence, cryptocurrency price trends and risk profiles are no longer separate from the flow within the overall financial system.

Cryptocurrency volatility shows parallels with commodity stocks

In support of his interpretation, Fracasi notes that Coinbase’s May Report Highlighting the volatility trend of Bitcoin and Ether. According to the monthly statistics report, the two leading cryptocurrencies are showing a daily swing between 4% and 5%. These fluctuations point to similarities with commodities such as natural gas and oil.

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Further observation showed that natural precious metals such as gold and silver exhibited a daily fluctuation range of 1% to 2%. These values ​​are much less risky than Bitcoin, the digital gold.

Fracasi’s argument stated that digital assets must be exposed to the macroeconomic forces that are obtainable in the financial system. He believed that such a measure would move the cryptocurrency as it is linked to the public order in risk profiles.

The economist analyzed market capitalization and volatility through additional comparisons of cryptocurrencies and commodities. He linked Ethereum and Lucid (LCID), an electric car maker, and Moderna (MRNA), a pharmaceutical company. On the Bitcoin side, he linked it to Tesla (TSLA), the electric car maker.

Economist Referred The current bear market for cryptocurrencies has contributed to these similarities. But according to his analysis, two-thirds are related to macro factors such as hovering economic stagnation and inflation. The other third is related to the weak normal outlook attributed to cryptocurrency.

Coinbase shows the performance of the cryptocurrency market similar to other traditional markets
Cryptocurrency market rising on the daily chart | source: Total Cryptocurrency Market Cap on TradingView.com

Some experts and analysts share the opinion that the role of macro factors in the declining cryptocurrency market is a plus for the industry.

Featured image from BBC, chart from TradingView.com





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