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IMF Sees Significant Increase in Correlations Between Bitcoin and Asian Equity Markets

IMF: Returns and Volatility Correlations Between Bitcoin and Asian Equity Markets Have Increased Significantly

Officials at the International Monetary Fund (IMF) say that the correlation between the performance of the Asian equity markets and crypto assets such as bitcoin and ethereum has increased significantly.

IMF Staff on Crypto and Correlation to Asian Equities

The International Monetary Fund (IMF) published a blog post on Monday on cryptocurrency regulation and how crypto is now “more in step with Asia’s equities.”

Anne-Marie Gulde-Wolf, deputy director of IMF’s Asia and Pacific Department, Nada Choueiri, the mission chief for India, and Tara Iyer, an economist in the global financial stability analysis division of the IMF’s Monetary and Financial Markets Department, authored the post.

“While the returns and volatility correlations between bitcoin and Asian equity markets were low before the pandemic, these have increased significantly since 2020,” they wrote. “Crypto trading, however, soared as millions stayed home and received government aid, while low interest rates and easy financing conditions also played a role.”

They detailed:

As Asian investors piled into crypto, the correlation between the performance of the region’s equity markets and crypto assets such as bitcoin and ethereum has increased.

The IMF officials noted that for example, “the return correlations of bitcoin and Indian stock markets have increased by 10-fold over the pandemic, suggesting limited risk diversification benefits of crypto.” In addition, “The volatility correlations have increased by 3-fold.”

The IMF officials further noted that “the rise in crypto-equity correlations in Asia has been accompanied by a sharp rise in crypto-equity volatility spillovers in some Asian countries,” elaborating:

This indicates a growing interconnectedness between the two asset classes that permits the transmission of shocks that can impact financial markets.

The IMF officials also asserted that “Regulatory frameworks for crypto in Asia should be tailored to the main uses of such assets within the countries.”

The authors added, “They should establish clear guidelines on regulated financial institutions and seek to inform and protect retail investors,” elaborating:

Finally, to be fully effective, crypto regulation should be closely coordinated across jurisdictions.

What do you think about the comments by the IMF officials? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Ethereum

Arthur Hayes Says Cardano Is A ‘Shitcoin’ – Here’s Why

Cardano (ADA) is a “shitcoin” without purpose that has no distinct advantage over competitors, according to BitMEX co-founder Arthur Hayes.

“Who gives a fuck? Zero?” said Hayes when asked “What about Cardano?” in an interview with Coin Bureau published on Sunday.

Cardano Is A Shitcoin, Says Hayes

Continuing to describe the cryptocurrency – a top ten digital asset by market cap – Hayes did not mince words: “The first wannabe Ethereum, and probably the first one to go to be irrelevant,” he said.

Typically, the popular crypto essayist and trader is well known as one of the loudest long-term Bitcoin (BTC) and Ethereum (ETH) bulls, and often expresses interest in small-cap cryptos for short-term trading.

During the same interview, Hayes even expressed interest in the memecoin “dogwifhat” calling it the “best dog money of this bull cycle.

“I love Rare Pepe’s… I think we’re going to see a resurgence of NFT trading volumes,” he added.

The writer’s unique callout of Cardano ruffled some feathers online – especially with the network’s founder, Charles Hoskinson. On Tuesday, Hoskinson asked Hayes why he was “throwing shade” at Cardano.

“Cause your coin is a piece of shit man,” Hayes replied. “Just buy some ETH and chill.”

What Makes Cardano Unique?

Much like Ethereum, Cardano is a smart contract platform for developing decentralized applications. It also popularized as one of the first well-developed proof-of-stake cryptocurrencies, which use crypto rather than energy to secure its network.

However, many popular blockchains today now use the same mechanism, with Ethereum undergoing a massive upgrade in 2022 to adopt proof of stake. In terms of both market size and DeFi TVL, Cardano is still outsized by competitors like Ethereum, Solana, and Binance Smart Chain (BSC).

On Tuesday, Hayes published a list of the world’s most popular Dapps, and asked which of them had originated or grown most popular on the Cardano blockchain.

“From my very limited knowledge, it looks like none of them do,” he said. “That’s why ADA is dog shit.”

On Bitcoin, however, Hayes remains a bull, expecting strong money printing from the Federal Reserve to drive the asset’s price up soon.

“When printing money happens and you debase the value of time and human labor, we rejoice and say great, fuck you, we’re gonna take Bitcoin to a million,” he told Coin Bureau.

Late last year, Hayes predicted that Bitcoin would reach between $750,000 and $1 million by the end of 2026.

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