On January 11, the International Monetary Fund issued a report on cryptos. The institution said that BTC and other digital currencies have grown from an unknown asset category to an integral component of the digital money revolution, which causes financial stability worries.
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The IMF mentioned that the global crypto market cap almost reached $3 T in November 2021, while in 2017 this metric stood at $620 billion. The organization noted that crypto popularity is growing among both institutional and retail investors despite the volatile nature of the market.
Based on the research of crypto and stock fields, the IMF said that the interrelation of cryptos with stocks has grown essentially. These market movements limit the risk diversification advantages of cryptos, according to the IMF. Before the pandemic, cryptos and equities weren’t interconnected as much as now.
Stats shared by the IMF show that in 2017-2019 the correlation coefficient between BTC and stock index S&P 500 was 0.01. In 2020-21 the metric rose to 0.36 as the assets surged and fell simultaneously.
The institution calls for a global regulation framework for the crypto market to prevent financial destabilization. Currently, the global crypto market cap stands at $2.07 T.