Cryptocurrencies increasingly correlated with traditional stock markets

The correlation between cryptocurrency markets and traditional stock markets has increased significantly recently, reaching about 50%, according to a new report from Coinbase Research. This trend is mainly attributed to the global economic easing policies implemented by the United States and China. Last week, the U.S. Federal Reserve cut interest rates by 50 basis points, a move that gave other central banks room to implement more stimulus. China subsequently announced a major fiscal and monetary stimulus package, including record interest rate cuts, increased liquidity support for the stock market, and a reduction in bank reserve requirements.

These policies are intended to increase lending, reduce China's credit burden, and are expected to increase market liquidity. Coinbase has noted in past reports that historical data shows a positive correlation between increased liquidity and stronger Bitcoin (BTC) prices. However, the report also warns that there may be a lag in the full impact of these policy measures on cryptocurrency prices.

Ethereum outperforms, altcoin market picks up

Ethereum has outperformed Bitcoin in recent market dynamics, rising 8% over the past week. The altcoin market also benefited from renewed investor interest, with key industries such as gaming, scaling solutions and Layer0 rising 17%, 11% and 9% respectively. This growth shows increased investor interest in diversifying crypto assets, especially amid favorable economic conditions in the general economy.

Source: Coinbase Ethereum transaction fees rise, showing that the market is picking up

Coinbase’s report highlights that multiple indicators indicate that the cryptocurrency market is entering a strong phase. Funding rates remain stable and open interest is at average levels over the past six months.

Analysts believe the data suggests the market is in a good position heading into October. Notably, Bitcoin has rallied in October eight times over the past decade, adding confidence to the market.

The overall economy is driven by positive economic trends, and we look forward to the fourth quarter.

Coinbase remains optimistic about the outlook for the cryptocurrency market in the fourth quarter of 2024. This positive outlook is primarily based on favorable general economic conditions and industry-specific factors that are driving demand growth in the crypto industry. The report points out that the impact of global economic policies, especially policy changes in the United States and China, has had a positive effect on the market.

While it may take time for the market to fully digest the impact of these policies, Coinbase believes that a favorable combination of overall economic trends and growth within the industry will continue to support the good performance of cryptocurrencies. Overall, the cryptocurrency market is expected to remain strong for the remainder of 2024 as global economic conditions improve and investor confidence grows.

[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.