Cryptocurrency and U.S. stock market correlation near all-time highs driven by macro factors

Odaily News Digital assets and U.S. stocks are moving near all-time highs, according to a correlation study, suggesting that the macroeconomic variables that drive stocks are also shaping crypto markets. The 40-day correlation coefficient between the 100 largest digital assets and the S&P 500 is about 0.67, according to data compiled by Bloomberg, with the indicator exceeding 0.72 only in the second quarter of 2022. A reading of 1 means assets move in sync, while a reading of -1 indicates opposite movements. Last week, U.S. stocks hit all-time highs and Bitcoin prices topped $64,000 after the Federal Reserve slashed interest rates by 50 basis points, kicking off an expected monetary easing cycle. Upcoming U.S. economic data is now critical for traders of all kinds, who can take clues about the possible extent and speed of further cuts to benchmark borrowing costs. "Macro factors are currently driving cryptocurrency prices, and unless we see a crypto-specific black swan event, this should continue throughout the Fed's easing cycle," said Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for digital asset derivatives trading. (Bloomberg)