Similar macroeconomic dynamics are causing digital assets and US stocks to move in tandem more and more. According to a recent analysis, the top 100 cryptocurrencies and the S&P 500 have a 40-day correlation coefficient of roughly 0.67, which is getting close to the record high of 0.72 from Q2 2022. Once thought to be uncorrelated, cryptocurrencies are now impacted by common economic factors such as inflation and monetary policy, particularly in times of economic uncertainty. This is partially because of increased institutional involvement.

Fed Actions Strengthen Correlation Between Stocks and Cryptos

The relationship between US stocks and cryptocurrencies has been stronger as a result of recent Federal Reserve activities. Following a rate decrease of 50 basis points, US markets reached all-time highs and Bitcoin soared above $64,000, signaling the start of a cycle of monetary easing. According to Caroline Mauron of Orbit Markets, macro issues are presently influencing cryptocurrency pricing. Investor attention is centered on Fed commentary and the impending Personal Consumption Expenditures (PCE) price index. Arbelos Markets' Sean McNulty has pointed out that the Fed's comments will likely have a greater impact than the PCE data itself.