According to a report by Coinbase Research, the cryptocurrency market has been showing a strong correlation with traditional stock markets lately.
The current correlation rate is around 50%, and this is due to the global economic easing efforts in the US and China. The positive impact of these actions on the crypto market is evident with Ethereum (ETH) outperforming Bitcoin (BTC) in recent days. ETH outperformed BTC last week, gaining 8%. Altcoins also benefited from the increased buyer interest, with gains of 17%, 11%, and 9% in sectors such as Gaming, Scaling Solutions, and Layer-0, respectively.
Cryptocurrency Market Enters Strong Phase, According to Coinbase Report
Coinbase’s report provides several key indicators that suggest the crypto market is entering a strong phase. Funding rates remain stable, while open interest is at the average of the last six months. According to analysts, this indicates that October has been a historically bullish period and the market is in a good position.
The company remains bullish on the cryptocurrency market for Q4 2024. This positive outlook is based on favorable macroeconomic conditions and industry-specific demand drivers. Coinbase also highlighted the impact of global economic policies, particularly in the US and China. Last week, the Fed cut interest rates by 50 basis points, paving the way for other central banks to implement more stimulus measures. China then announced a significant fiscal and monetary stimulus package that included record-breaking interest rate cuts and liquidity support.
China’s reserve requirement reduction aims to increase lending and ease credit burdens, which is notable for its potential to increase market liquidity. Coinbase found a positive correlation between increased liquidity and strong BTC performance, but the report notes that there may be a lag before these policies translate into crypto prices. Overall, Coinbase offers a positive outlook for the remainder of 2024, with the expectation that positive macroeconomic trends and industry-specific growth will continue to support crypto performance.
