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

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)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank (Schweiz) AG
Beethovenstrasse 33
CH-8002
Zurich
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.