Crypto Crypto Crypto

Crypto Weekly: Equities and cryptocurrencies in sync

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.
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.
Bitcoin/USD - Source: Saxo Group
Ethereum/USD - Source: Saxo Group
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