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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

Ethereum Price Analysis: ETH Challenges Key Resistance, Is $3.5K Next?

Ethereum is approaching a decisive resistance at the 200-day moving average of $2.7K, signalling a potential bullish shift in market sentiment. A successful breakout above this level could ignite a strong rally, with the price likely targeting the $3.5K threshold in the mid-term.

Technical Analysis

The Daily Chart

ETH is on the verge of a decisive breakout above the critical 200-day moving average at $2.7K, a key level that has historically served as both support and resistance. After a brief consolidation beneath this threshold, the market has regained strength, with renewed buying pressure pushing the price toward a potential breakout.

A confirmed break above the $2.7K resistance would mark a significant shift in market sentiment, signaling the beginning of a broader bullish reversal. In this scenario, Ethereum is likely to target the $3K mark in the near term, with a possible extension toward the $3.5K resistance in the mid-term.

However, if the breakout attempt is rejected, selling pressure may take control, leading to a deeper retracement toward the $2K support region, aligned with the 100-day moving average. This level would then serve as a critical zone for the bulls to regroup.

The 4-Hour Chart

On the lower timeframe, ETH recently consolidated within a bullish continuation wedge pattern. After testing and holding support at the wedge’s lower boundary near $2.3K, the asset went on an impulsive rally, breaking out of the structure.

This breakout reflects a continuation of the bullish trend. Nevertheless, Ethereum now faces a key short-term resistance around the $2.7K swing high. A brief rejection and pullback toward the breakout level could occur, which would serve to validate the breakout before a potential continuation rally toward the $3K and possibly $3.5K levels.

Onchain Analysis

The Binance liquidation heatmap continues to offer key insights into Ethereum’s evolving market dynamics and potential price trajectory. Following a strong upward movement, ETH recently reached the critical $2.7K level, where a dense cluster of liquidation levels was triggered, flushing out leveraged short positions and offloading significant market liquidity.

Historically, in phases of recovery or strong bullish sentiment, markets tend to hunt these liquidity pockets, as smart money and institutional participants trigger forced liquidations to fuel upward momentum.

Currently, Ethereum has reclaimed the $2.5K resistance and is holding above $2.7K, signaling renewed bullish strength. Notably, the heatmap reveals a noticeable void of substantial liquidation levels between the current price and the $3.5K range. This lack of sell-side liquidity indicates reduced resistance ahead, supporting the potential for a continued rally toward the $3.5K threshold in the mid-term.

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.

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Ethereum

$100K BTC, 8th Time’s the Charm

Last week the crypto market didn’t just ride on bitcoin’s coattails—it ran with it. As bitcoin smashed through the $100,000 mark (again), ethereum, solana, and a host of altcoins followed suit. This editorial is from last week’s edition of the Week in Review newsletter. Subscribe to the weekly newsletter to get the editorial the second [……
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Ethereum

Ethereum Price Analysis: What Lies Ahead for ETH on its Way to $3K?

Ethereum is showing signs of short-term exhaustion after a strong impulsive rally. Although the buyers have managed to break through major resistance levels, the price is currently stalling around a key structure and could be at risk of a local top if momentum fades.

Technical Analysis

The Daily Chart

ETH has decisively broken above the 100-day moving average, located around the $2,100 area, and is also trying to reclaim the 200-day moving average near the $2,600 mark. Moreover, the RSI is hovering in the overbought territory, signalling that the rally might be overextended in the short term.

Currently, the asset is consolidating just below the lower boundary of the previously broken long-term ascending channel. A daily close above this level would invalidate the idea of a pullback and open the door toward the $3,000 zone, which coincides with a prior supply area. On the downside, the $2,150 zone now acts as solid support and could serve as a potential re-entry point for buyers if the market pulls back.

The 4-Hour Chart

The 4-hour timeframe shows ETH consolidating within a narrow range around the $2,600 level. The price is maintaining its gains following the breakout from a descending channel and a series of bullish imbalances filled along the way.

The RSI has also cooled off, showing a decline in bullish momentum but no immediate signs of bearish divergence. If ETH can break and hold above the $2,600 zone, it may gather enough strength to run toward the key $3,000 resistance level soon.

Onchain Analysis

Exchange netflows remain negative on aggregate, with a recent reading showing a net outflow of over 170K ETH. This indicates a broader trend of accumulation and long-term holding, as coins continue to leave centralized exchanges and move into self-custody. Persistent outflows during a price rally typically support the case for bullish continuation as they reflect a lack of intent to sell.

However, it’s worth noting that this behavior also raises caution, as extreme bullish positioning can lead to sharp corrections if the sentiment becomes too one-sided. Traders should monitor changes in netflows closely, especially if inflows begin to spike around major resistance levels, as that could mark local tops and signal profit-taking.

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.

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