Crypto Weekly: Equities and cryptocurrencies in sync

Mads Eberhardt 400x400
Mads Eberhardt

Cryptocurrency Analyst

Summary:  The volatility in the equity and crypto markets has been intense this year. The two markets have moved somewhat in sync - to a much higher degree than last year. In the NFT market, OpenSea was falsely rumored to have been exploited this weekend, while NYSE might double down on the very same.


Crypto has been highly correlated to the stock market this year

Research by Anders Nysteen, Senior Quantitative Analyst at Saxo Bank, shows that the crypto market has been highly correlated with the equity market this year. For 2022, the correlation between daily returns of the S&P 500 index and Bitcoin has been as high as 0.56 to 0.61, depending on correlation measure and source. In contrast, the correlation was only around 0.25 in 2021. It seems the crypto market to a large degree has been driven by the same factors as the equity markets, i.e., inflation worries and Russia-Ukraine tension. Further, following a transformed risk sentiment in equities stressed by the slipping in technology stocks this year, the crypto market has been impacted because a larger amount of traditional stock traders arguably also have cryptos in their portfolios – and thus are scaling their risk proportionally between stocks and cryptos. As a part of a portfolio, cryptos may thus not provide the same degree of diversification as earlier.
21_MAEB_1
Source: Bloomberg and Saxo Group

From alleged hacking to phishing of OpenSea users

Early Sunday, the Ethereum contract of the largest non-fungible tokens (NFTs) marketplace OpenSea was believed to have been exploited, so multiple users had their NFTs stolen by the alleged hackers. Since OpenSea consumes the most gas (transactions) on Ethereum and is one of the most utilized use cases on the blockchain, its value for the crypto community as a whole is vital. On account of the latter, over the following hours, the Ethereum price slipped around 4%. It was later revealed that neither OpenSea nor their Ethereum contracts were exploited. Instead, it was a phishing attack based on a malicious contract that the attacker somehow got several users to approve, which enabled the person in question to steal their NFTs. OpenSea later disclosed that 17 individuals had been impacted by the phishing.

This stresses that the crypto market is severely sensitive to rumors on hacks, particularly on larger and frequently used protocols, as they act as one of the industry’s few lifelines to authentic use cases. Luckily, this turned out not to be (one more) such hack.

New York Stock Exchange files trademark to trade NFTs

In this NFT matter, OpenSea is not expected to have the market completely by themselves with both Coinbase and Kraken about to launch their respective NFT marketplaces. Likewise, OpenSea might now get competition from another company namely Intercontinental Exchange-owned New York Stock Exchange, known as NYSE. NYSE filed last week a trademark application to register the NYSE name concerning various products and services related to crypto, for instance, virtual reality and NFTs. Hence, we might see NYSE double down on NFTs in addition to the six NFTs the company released in April last year, each symbolizing the first trades of Spotify, Snowflake, Unity, DoorDash, Roblox, and Coupang on the exchange.
21_MAEB_BTC
Bitcoin/USD - Source: Saxo Group
21_MAEB_ETH
Ethereum/USD - Source: Saxo Group

Quarterly Outlook 2024 Q4

01 /

  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Head of FX Strategy

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Head of FX Strategy

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.