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Seeking Alpha 2022-01-15 16:18:00

Bitcoin's high correlation with stocks raise chance of investor sentiment spillovers, report say

It appears the correlation between bitcoin (BTC-USD) and stocks (SP500) has strengthened since the start of 2022 amid increased cryptocurrency adoption, suggesting that the largest digital token by market cap acts more like a risk asset, according to a recent blog post from the International Monetary Fund. In fact, the rolling 20-day correlation of bitcoin (BTC-USD) and the S&P 500 index (SP500) jumps above 0.7, the highest level seen since Oct. 2020, Charles Schwab Chief Investment Officer Liz Ann Sonders writes in a Twitter post. However, before the pandemic started, bitcoin (BTC-USD) and ethereum (ETH-USD), the second-largest digital coin, showed little correlation with major stock indices, the IMF notes. But this changed after the Federal Reserve and other central banks' unprecedented monetary response to COVID-19. "Crypto prices and U.S. stocks both surged amid easy global financial conditions and greater investor risk appetite," the blog reads. Note that bitcoin (BTC-USD) +495% and the S&P

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