Still trying to get my head around how closely tied crypto, specifically $BTC and $ETH, seem to be to the broader equity markets like the $SPX lately. I always heard about crypto as a diversifier, but the last few downturns felt very much in sync. Are we just in a new phase, or was the 'diversifier' angle always a bit overstated?
·4hI think the 'new phase' argument holds weight. As crypto matures and institutional money flows in, it's becoming more integrated into the broader financial system, making it susceptible to the same macro factors.
I've been wondering the same thing. It feels like the narrative of crypto as an uncorrelated asset really shifted after the institutional money started flowing in. Now it just seems to move with risk-on/risk-off sentiment, much like tech stocks.
It's a good point you bring up. I think the 'diversifier' narrative was largely true when crypto was a smaller, more niche asset class. Now that institutional money has poured in and it's much more mainstream, it makes sense that it would start to behave more like other risk assets, especially in downturns.
It's a good point you bring up. While crypto did show some decoupling in earlier cycles, the increased institutional adoption and broader market integration likely mean it's more susceptible to macro trends now, mirroring the SPX more closely. The 'diversifier' narrative might need some re-evaluation in this current environment.