The correlation between the cryptocurrency and stock markets is at an all-time high in September, according to a recent Coinbase research. The research also indicated that global easing campaigns in China and the U.S. are among the main reasons for the increased correlation, now nearing 50%.
The report comes after a few major events in the crypto community went down, including the TOKEN2049 event in Singapore and the Solana Breakpoint conference. The Federal Reserve also decided upon an aggressive approach to the interest rate cuts, applying a 50-basis-point rate cut.
The Fed’s decision during the Federal Open Market Committee meeting positively affected both crypto and stock markets. Bitcoin rose significantly, crossing the $64,000 mark. Additionally, crypto-related stocks rose, including Coinbase’s COIN and Microstrategy’s MSTR.
Data from Bloomberg showed that U.S. equity futures were in tandem with crypto prices this week. Several U.S. stocks rose, with some reaching new all-time highs. Stocks notably suffered losses after the Kamala Harris—Donald Trump presidential debate.
Bloomberg data also indicated that the 40-day correlation coefficient gauging the S&P 500 and the top 100 cryptocurrencies hit 0.67. The data further revealed that the last time the coefficient hit such highs was in 2022, at 0.72.
Macroeconomic factors fuel the correlation
Orbit Markets co-founder Caroline Mauron revealed that recent economic news has significantly impacted traditional and digital markets. Likewise, there is major speculation that several macroeconomic events are increasing the current correlation between stocks and crypto. Traders are also expected to ride the monetary easing wave speculated to come after the Fed’s rate cut decision.
“Macro factors are driving crypto prices currently, and this should continue throughout the Fed’s easing cycle, unless we see a crypto-specific black swan event.”
–Caroline Mauron, Orbit Markets Co-founder
Macroeconomic conditions previously did not affect crypto markets, reducing their correlation with equity markets. Data shows that increased maturity in crypto markets led to macroeconomic factors affecting their price performance. The current factors, according to Coinbase, speculated that the markets had the perfect conditions to begin a good month in October. Crypto has historically performed well during October as compared to September.
Coinbase touches on Ethereum outperforming Bitcoin
The Coinbase research highlighted that Ethereum has been outperforming Bitcoin during the heightened correlation. The research’s data showed that ETH had an 8% gain over BTC in the week after the Fed’s announcement. Currently, ETH is up 6.08% over the past 7 days, still outperforming BTC, which has a 4.77% gain at the time of writing.
However, there is negative sentiment toward the Ethereum blockchain, with increasing concerns about the Ethereum Foundation. Lookonchain data showed that the foundation sold 100 ETH, bringing its ETH sales this year to 3,566 ETH. One X user replied that they were waiting to see how the sales sway market sentiment and development projects.
The report also mentioned a renewed interest in altcoins among investors, with many skyrocketing, including memecoins like Shiba Inu and PEPE. The research noted that several sectors, including Layer 0, gaming, and scaling solutions, have been the best performers. The sectors gained 9%, 17%, and 11%, respectively, in the past week.