FTX US Chief Brett Harrison Says Crypto Markets’ Correlation With Stocks Not What Traders Think – Here’s Why

3


Brett Harrison, CEO of crypto exchange FTX US is giving his take on why digital asset markets seem to be closely correlated with US stock indices.

In a lengthy thread, Harrison addresses a common criticism of crypto not being a good inflation hedge or a portfolio diversifier since it strongly correlates with the stock market.

“Every interview I’ve watched (or done) recently includes questions about apparent correlations between stocks and crypto, usually amid discussion of whether crypto is (1) a good inflation hedge, (2) a portfolio diversifier, (3) an independent store of value.”

Harrison says the reason for the correlation is that the same big players who are operating in equities markets are also involved in crypto, making the asset classes move in tandem.

“I think the majority of what we’ve seen with crypto and equity correlations in the last several months comes purely from [extrinsic buy/sell pressure].

Global assets are down, across stocks, bonds, and crypto. Large institutions with allocations across these different asset classes will look for portions of their portfolio to sell off to reduce risk, increase cash balances, cover margin calls, etc

Put another way, in down markets most correlations go to one. Taking a snapshot of correlations at any given time does not tell the story of the intrinsic value of an asset, nor what its true relationship is or should be to other assets.”

In statistics, a correlation coefficient of one indicates a perfect linear relationship.

Check Price Action

Don’t Miss a Beat – Subscribe to get crypto email alerts delivered directly to your inbox

Follow us on Twitter, Facebook and Telegram

Surf The Daily Hodl Mix

&nbsp
Check Latest News Headlines

 

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Featured Image: Shutterstock/prodigital art/Natalia Siiatovskaia





Source link

Comments are closed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More