Economists at the International Monetary Fund (IMF) have revealed that the return correlation between BTC and stocks has increased significantly in Asian stock markets.
A group of IMF economists presented a report, indicating a tenfold increase in the return correlation between cryptocurrency and stock markets in Asia. It also recorded a threefold growth in the correlation of volatility levels.
The analysts point to the intensive integration of the cryptocurrency market into the traditional financial system. In their opinion, this poses certain risks to global financial stability, as turmoil in the crypto market may spread to stock markets.
According to IMF economists, the risks can be neutralized by additional regulatory measures taken by the Asian countries. In particular, India, Vietnam and Thailand, where there is a sharp increase in the adoption of cryptocurrency platforms and financial instruments by both institutional and retail investors.
At the same time, the increase in correlation indicates a diminishing advantage of crypto-assets as a means of diversifying investment risk.
About 52% of private investors in Asia owned some form of cryptocurrency during Q1 2022, as reported by analysts at the consulting firm Accenture. Moreover, Coinbase Institute economists stated the fact that cryptocurrencies, stocks, and commodities share a similar risk profile.
