+91 70111 97831
  • About us
    • Data Analyst Team
    • Magazines Sections
    • Editorial Team
  • Advertise with us!
  • Business review
  • Guest writers
    • Guest Contribution
  • Subscription
  • Career
  • Testimonials
  • Contact Us
Monday, May 29, 2023
International Magazine
Business Connect  | Best Business magazine In India
Upcoming Event
  • News
  • Magazine
  • Interior Design
  • Press Release
    • PR Enquiry
  • Success Stories
  • Latest Edition
  • Launchpad
  • Blogs
  • Testimonials
No Result
View All Result
  • News
  • Magazine
  • Interior Design
  • Press Release
    • PR Enquiry
  • Success Stories
  • Latest Edition
  • Launchpad
  • Blogs
  • Testimonials
No Result
View All Result
Business Connect  | Best Business magazine In India
No Result
View All Result
  • About us
  • Guest writers
  • Business review
  • Advertise with us!
  • Subscription
  • Privacy
  • Why us
Home Blog

How the Crypto Industry is Overtaking the Stock Market

admin by admin
April 21, 2023
in Blog, Guest Posts
How the Crypto Industry is Overtaking the Stock Market
Share on FacebookShare on Twitter

How the Crypto Industry is Overtaking the Stock Market

Concerns over the financial system’s stability have arisen as a result of the maturation of crypto assets like Bitcoin, which have gone from being an obscure financial asset with very few users to becoming a vital element of the revolution in digital assets. Despite the high level of volatility, the market value of these alternative assets increased to nearly $3 trillion in November, up from $620 billion in 2017. This increase was driven by the surging popularity of these assets among individual and institutional investors alike.

Even after last week’s decline, the aggregate market value had reached over $2 trillion, which still represents a nearly fourfold growth compared to where it was in 2017. According to newly published research from the International Monetary Fund (IMF), increased cryptocurrency adoption has led to a significant increase in the connection of crypto assets to traditional holdings such as stocks. This has the effect of reducing the risk perception diversification benefits of crypto assets and increasing the risk of contagion throughout financial markets.

What is Bitcoin?

Bitcoin (BTC) is an asset class that is subject to extremely high levels of speculation, although the majority of individuals in the Uk are still unfamiliar with it. As a result of this, before making any kind of investment in Bitcoin, you should make sure you have a good understanding of what Bitcoin is, where to buy bitcoin safely and effectively and how it works.

Bitcoin, in its most fundamental form, is a sort of virtual currency that was introduced for the first time in 2009. An unidentified software developer who is known as Satoshi Nakamoto is credited with the invention of the technology. This revolutionary cryptocurrency is based on the principle that it is not controlled or owned by any one individual, organisation, state, or central bank. This is its defining characteristic.  On the other hand, it lacks a centralised authority.

Because of this, Bitcoin, in contrast to traditional fiat currencies such as the British pound or the US dollar, cannot be manipulated in any way, nor can it be printed. Instead, the software behind Bitcoin generates a brand new cryptocurrency every ten minutes. The costs associated with this will continue to accrue until the supply of digital money exceeds 25 million units, which is forecast to take place in the year 2140. If you have Bitcoins in your possession, you have the ability to send them to another user.

Additionally, the number of establishments that accept payments in the form of Bitcoin continues to rise. On the other hand, the overwhelming majority of people who buy Bitcoin in the UK do so as a form of investment. That is to state, they have the expectation that now the Bitcoin value will rise over the duration of time, and as a result, they plan to sell their coins at a significantly higher price.

Bitcoin And Stocks Are Moving In Sync

Prior to the epidemic, crypto assets including Bitcoin and Ether exhibited a relatively low association with stock market indices. It was believed that they would help broaden risk and provide protection against fluctuations in the value of other asset groups. But all of that changed after the unprecedented responses of the central banks to the crisis in the early 2020s.

The prices of cryptocurrencies and US shares both increased as a result of loosening global financial circumstances and increased investor appetite for risk. For instance, over the year of 2017–19, gains on Bitcoin didn’t move in any specific direction in relation to the S&P 500, which is the standard stock index for the United States.

The coefficient of correlation of their daily movements was only 0.01, but that measure soared to 0.36 for 2020 -21 even as assets flowed more in lockstep, either rising with each other or falling together. This occurred because the assets travelled more in lockstep. The stronger relationship between crypto and stocks is also visible in emerging markets, a number of which have taken a lead in the adoption of crypto-assets. This is because emerging market economies are still in the process of developing their financial markets.

For instance, in 2020–21, the relationship between earnings on the MSCI developing markets index as well as Bitcoin was 0.34, which represents a 17-fold rise from the correlation in the years prior. More robust correlations point to the fact that Bitcoin has already been behaving in a risky manner as an asset. Its connection with stocks is now larger than the correlation between stocks as well as other assets such as investment-grade bonds, major currencies, and gold, which indicates that the risk diversification benefits are not as great as they were once believed to be.

RelatedPosts

What is a B2B eCommerce Marketplace?

Chatbot

Behavioral Finance: Influencing Trading and Investment Choices

Decoding China and Dubai’s Artificial Rain: The Secret of Cloud Seeding

Short but Powerful: The Top 10 Mini Web Series You Can’t Miss

The Ripple Effect of Crypto

The increased link between crypto stocks and traditional stocks enhances the prospect of investor sentiment bleeding over into other asset classes. In point of fact, according to the findings of our study, which investigates the price and volatility spillovers that occur among both crypto as well as global equity markets, the degree to which Bitcoin returns, as well as volatility, are transmitted to equity markets, and inversely, has significantly increased in the period of 2020–21 in comparison to 2017–19.

The volatility of Bitcoin accounts for around one-sixth of the variance in S&P 500 returns and approximately one-tenth of the variance in S&P 500 volatility throughout the pandemic. Because of this, a precipitous drop in Bitcoin’s price can cause investors to become more risk-averse, which in turn can lead to a reduction in investing in stock markets.

The fact that sentiment inside one marketplace is communicated to another in a manner that is not trivial is suggested by the fact that spillovers in the opposite direction from S&P 500 to Bitcoin, are already on average of such a similar magnitude. Stablecoins, a form of cryptocurrency that tries to retain its relative value to a particular asset or even a collection of assets. Stablecoins aim to preserve their value in relation to a certain asset.

During the pandemic, there was also an increase in the spillovers from the most dominant virtual currency, Tether, to global stocks. These spillovers are significantly smaller than those caused by Bitcoin, however, and only explain between 4 and 7 % of variance in the returns and volatility of US equity markets. Notably, our research indicates that spillovers among crypto and equity markets have a tendency to increase during periods of financial market volatility, such as the market turmoil that occurred in March 2020, or during periods of sharp swings in the price of Bitcoin, such as those that were observed at the beginning of 2021.

Must Read:- 

  • Top 10 shoe brands in India for men & women 2021
  • Top 10 Schools in Delhi 2021, list of best schools for your child
  • Top 10 richest actors in the world 2021
  • Business vs Job: Which is Better
  • Top 10 series on Netflix 2021, don’t miss these must-watch series
  • Upcoming List of Top Indian Web Series of 2021
  • Top 10 richest player of the world 2021
  • Top 10 highest paid CEO in the World
  • Top 10 richest person of India
  • Top 10 Highest Paid CEOs of India
  • The Success Story of Steve Jobs
  • Top 10 Business Magazine In India
  • Top 10 Business Newspaper In India
  • Top 10 richest billionaires in the world 2021
Previous Post

The Billionaire Boohoo family: From a Market Stall to a Billion Dollar Business

Next Post

EUMENTIS INFORMATICS

admin

admin

Admin is a Digital Marketing Executive at Business Connect Magazine. With his expertise in digital marketing strategies, leverages his knowledge to optimize online presence, enhance brand visibility, and engage with the target audience effectively.

Next Post
EUMENTIS INFORMATICS

EUMENTIS INFORMATICS

Apple iPhone 14 Pro and iPhone 14 Pro Max launched in India: Specifications, price & more

Apple iPhone 14 Pro and iPhone 14 Pro Max launched in India: Specifications, price & more

Queen Elizabeth II, Britain's longest-reigning monarch, dies peacefully at 96

Queen Elizabeth II, Britain's longest-reigning monarch, dies peacefully at 96

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Upcomming event 2023

Business Connect magazine events

Recent News

Hyundai Mobis Smart Headlamps: A Game-changer in Night-time Accident Prevention

Hyundai Mobis Smart Headlamps: A Game-changer in Night-time Accident Prevention

May 29, 2023
Breaking Barriers: China to send its first civilian astronaut into Space

Breaking Barriers: China to send its first civilian astronaut into Space

May 29, 2023
What is a B2B eCommerce Marketplace?

What is a B2B eCommerce Marketplace?

May 29, 2023
IPL 2023, GT vs CSK: Dhoni's Dream in Jeopardy If Final Fails to Happen Today

IPL 2023, GT vs CSK: Dhoni’s Dream in Jeopardy If Final Fails to Happen Today

May 29, 2023
https://www.youtube.com/watch?v=5gPvV9iUPII
Business Connect magazine events | Business magazine

Recommended

CodeStore Technologies

CodeStore Technologies

April 21, 2023
GOELD FROZEN FOOD

GOELD FROZEN FOOD

April 24, 2023

Most Popular

Hyundai Mobis Smart Headlamps: A Game-changer in Night-time Accident Prevention
News

Hyundai Mobis Smart Headlamps: A Game-changer in Night-time Accident Prevention

May 29, 2023
Breaking Barriers: China to send its first civilian astronaut into Space
News

Breaking Barriers: China to send its first civilian astronaut into Space

May 29, 2023
What is a B2B eCommerce Marketplace?
Blog

What is a B2B eCommerce Marketplace?

May 29, 2023

Business Connect is a business magazine whose name is derived from Business Community which connects entrepreneurs, executive officers and VCs. With a mission to have one of the highest readership figures of senior-level executives and investors in India, Business Connect brings its edition on monthly basis.

Follow Us

Recent News

Hyundai Mobis Smart Headlamps: A Game-changer in Night-time Accident Prevention

Hyundai Mobis Smart Headlamps: A Game-changer in Night-time Accident Prevention

May 29, 2023
Breaking Barriers: China to send its first civilian astronaut into Space

Breaking Barriers: China to send its first civilian astronaut into Space

May 29, 2023

Contact Information

Address: 807, DDA 2, District Centre, Janakpuri West, New Delhi-110058

Phone Number: +91-11-41065208, 42636209

Mail: abhishek@businessconnectindia.in / events@businessconnectindia.in

Contact to Get Feature as Guest Post : info@businessconnectindia.in

  • About us
  • Why us
  • Healthcare
  • Guest writers
  • Career

© 2020 All Rights Reserved by Business Connect India

No Result
View All Result
  • News
  • Magazine
  • Interior Design
  • Press Release
    • PR Enquiry
  • Success Stories
  • Latest Edition
  • Launchpad
  • Blogs
  • Testimonials

© 2020 All Rights Reserved by Business Connect India

Need Help? Chat with us
Start a Conversation
Hi! Click one of our member below to chat on Whatsapp
The team typically replies in a few minutes.
Ashish Kumar
Sales & Support
ADVERTISEMENT