Here's Why Crypto Markets Are Relatively Aligned With Stock Markets

In recent months, the movement of the crypto market has been relatively in sync with the stock market, which investors are currently benchmarking against.

Since the crypto market crash began, the relationship between the stock market and the crypto market has grown stronger, with both markets moving up and down simultaneously.
In fact, previously the two were not connected to each other because they had different fundamental bases, as well as different value indicators (valuations) because they were related to company performance, while crypto was focused on the project behind it.

Stock Market and Crypto Market

Based on a Bloomberg report, after going through a period of widespread anxiety, investors are now looking back at the mood in the US stock market to gauge whether the worst is over or not.In the last few weeks, the stock market, especially in the technology sector, has started to grow, as well as the crypto market, especially Bitcoin.

It is known that the coefficient of 90-day relationship between Bitcoin and the S&P500 stock market index decreased slightly in June, but has now returned to 0.65.That means, there was a fairly unidirectional move (totally unidirectional if at the 1.00 mark) between the stock and crypto markets in July, which suggests global risk appetite holds an important factor in lifting investor appetite for risk assets.

According to Bloomberg Intelligence Analyst Mike McGlone, crypto markets may outperform stocks if equities bottom out.“There are few stronger forces in the [crypto] market than when the stock market was going down at a high speed like in the first half. Crypto is part of that ebb and flow," McGlone added.

Historically, the relationship between the two markets has existed, which was motivated by the hawkish attitude of the US central bank, the Fed.The Fed, which is currently aiming to suppress inflation as high as four decades, has become the basis of the volatility that exists in global asset markets, including crypto, in 2022.

The question that everyone is asking now is, "have the two markets hit their bottom?," this is still difficult to answer because the central bank's move is the benchmark. Generally, this is beyond expectations and expectations.

Even so, there are still many analysts and observers who believe that the bearish crypto market in 2022 is really bad for crypto assets. However, this will eventually come to an end and turn crypto winter into spring, aka a resurgence of bullish attempts. Lets watch.