– Crypto has risen to start the year off the back of expectations that interest rates may be cut sooner than anticipated, further disproving the notion that it is uncorrelated.
– Assessing the price action of crypto through the pandemic and subsequent rate-raising cycle shows an extremely risky asset class that moves in line with other speculative asset classes.
– This latest rally is the strongest rally in 9 months, proving that any narrative around crypto being an uncorrelated asset is dead.
The world of cryptocurrency has been abuzz recently with the latest rally in digital assets, leading to the strongest rally in nine months. This rally has been driven by the expectation that interest rates may be cut sooner than anticipated, and it has served to further disprove the notion that cryptocurrency is uncorrelated.
In order to understand this latest rally, it is important to take a look back at the events of the past few years in the crypto space. It all started with central banks around the world pursuing ultra-low interest rate policy in an attempt to stimulate the global economy. This was followed by the onset of the COVID-19 pandemic, which brought economies to a grinding halt and forced central banks to respond with unprecedented stimulus packages. This resulted in a violent upward movement in the price of cryptocurrency, as investors sought out alternative investments in a volatile market.
Since then, we have seen cryptocurrency continue to move in line with other speculative asset classes, as evidenced by its price action in the wake of the pandemic and subsequent rate-raising cycle. This shows that cryptocurrency is an extremely risky asset class, and one that is far from uncorrelated with other markets.
The latest rally in cryptocurrency further drives this point home. The rally has been driven by the expectation that interest rates may be cut sooner than anticipated, and it has been met with enthusiasm from investors. This has resulted in the strongest rally in nine months, which proves once and for all that any narrative around cryptocurrency being an uncorrelated asset is dead.
The latest rally in cryptocurrency serves as a reminder that investors should always be wary of the risks associated with investing in digital assets. While there can be great rewards to be had, it is important to remember that the asset class is highly volatile and one that moves in line with other speculative asset classes. In light of this, investors should always make sure to do their research and be aware of the risks before investing.