Coinbase Research Shows Record High Correlation Between Crypto And Stock Markets

Coinbase recent report reveals a 50% correlation between cryptocurrency and stock markets, driven by global economic factors and Fed interest rate cuts. The correlation is the highest since 2022, with both markets surging after the Federal Reserve latest policy decisions.

Coinbase latest research highlights a significant increase in the correlation between cryptocurrency and traditional stock markets, reaching nearly 50% this September. According to the report, the global easing campaigns in major economies, such as China and the U.S., are fueling the heightened correlation, particularly after the Federal Reserve implemented a 50-basis-point rate cut during its most recent Federal Open Market Committee (FOMC) meeting.

This monetary policy decision had a notable impact on both crypto and stock markets, with Bitcoin crossing the $64,000 mark and crypto-related stocks like Coinbase’s COIN and Microstrategy’s MSTR experiencing a surge. Data from Bloomberg supported this, showing U.S. equity futures moving in tandem with crypto prices, further strengthening the correlation.

Bloomberg’s data also indicated that the 40-day correlation coefficient between the S&P 500 and the top 100 cryptocurrencies hit 0.67, the highest since 2022, when it reached 0.72.

Macroeconomic Drivers of Correlation
Caroline Mauron, co-founder of Orbit Markets, noted that recent macroeconomic developments are contributing to the increased correlation between traditional stocks and cryptocurrencies. Traders are expected to capitalize on the monetary easing following the Fed’s aggressive rate cut decision.

“Macro factors are driving crypto prices currently, and this trend should continue throughout the Fed’s easing cycle unless a crypto-specific black swan event occurs,” Mauron explained.

Historically, crypto markets were less influenced by macroeconomic factors, but as they mature, these forces have begun to play a more prominent role in their price performance. Coinbase speculates that October could be a strong month for crypto, as the asset class has historically performed well during this period compared to September.

Ethereum Outpaces Bitcoin
The research also pointed out that Ethereum (ETH) has been outperforming Bitcoin (BTC) in recent weeks. Ethereum gained 8% over Bitcoin following the Fed’s announcement, and at the time of writing, ETH is up 6.08% over the past week, compared to BTC’s 4.77% gain.

However, some concerns have emerged regarding the Ethereum Foundation’s recent sale of 100 ETH, bringing its total sales this year to 3,566 ETH. Investors are watching closely to see how these sales will affect market sentiment and future development projects on the Ethereum blockchain.

Renewed Altcoin Interest
The report further highlighted renewed interest in altcoins, with notable gains across several sectors. Memecoins such as Shiba Inu and PEPE have seen increased traction, while Layer 0, gaming, and scaling solutions sectors have performed exceptionally well, gaining 9%, 17%, and 11%, respectively, over the past week.

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