Historically Bitcoin has a relatively low correlation to stock market assets. But! it reached its highest correlation since July 2020, at 0.61 and 0.58, according to a new report from Kaiko

The correlation coefficient is usually given as a number between -1 and 1.

The closer it is to -1, the stronger the negative correlation (i.e., the price of Bitcoin and stocks tend to move in opposite directions). The closer to 1, the stronger the positive correlation (the two variables tend to move in the same direction, meaning that Bitcoin is following stocks closely).

"The Federal Reserve's December meeting had a strong impact on global financial markets, with traders reacting swiftly to the prospect of monetary tightening," - Kaiko report reads.

The S&P 500 is down around ~2%-3% since the start of the year, while Nasdaq lost ~5%-6% of its value. Then at the same time, Bitcoin, which briefly dipped below $40,000 on Monday, is down 9.79% since the start of the year.

Go on to Altcoin got dumped.

Most Layer 1 tokens declined greatly last week, Ethereum alongside the overall crypto market. The decline comes even though alternative networks have gained market share relative to Ethereum over the past year (measured by TVL) and the planned scaling of the network is still months away.

Avalanche (AVAX) one of the strongest declined at -22% since 2022’s open, well below Ethereum’s 16% drop. The native token of Terra the second largest blockchain for DeFi also declined by 20%. Terra (LUNA) have a strong rally up over the past few months boosted by its Columbus-5 upgrade and the launch of several projects such as the DEX (Astroport). Fantom (FTM) was the best performer, closing Sunday about where it started the year.

IMF (International Monetary Fund) Stated

The 60-day correlation coefficient of the S&P 500 index and Bitcoin daily moves was just 0.01 between 2017 and 2019. However, the measure spiked to 0.36 for the 2020-2021 period. Furthermore, the study also indicated that the correlation had spilled over to stablecoins and the equity market.

The correlation was accelerated due to the coronavirus economic impact. Consequently, the organization states that digital currencies like Bitcoin that were viewed as an alternative to market swings in other investment options no longer serve that purpose. (Because of the correlation to the traditional market)

“The correlation of crypto assets with traditional holdings like stocks has increased significantly, which limits their perceived risk diversification benefits and raises the risk of contagion across financial markets,” -IMF.

Still goin on with the controversy of Cryptocurrency. Several countries want to ban crypto.

IMF chief economist Gita Gopinath has expressed her opposition towards the general banning of cryptocurrencies, but instead, she wants the sector regulated.

“Regulating crypto assets and currencies is essential, especially for emerging and developing economies, as banning them may not work as crypto exchanges are located offshore, which makes it easier for an individual to trade in them despite the ban,” -Gopinath.

Personally, crypto is still my main investment because of the technologies itself! and you can invest your money with a several ways, such as on DeFi, you can Stake, Lend, Borrow, Making LP. There's more on NFT too, Gaming. There are multiple ways to earn on Crypto. It's not like the traditional market.

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