The correlation between the performance of Asia's equity markets and crypto assets has increased as investors from that region piled into crypto in recent years, according to a blog from the International Monetary Fund (IMF).
Currently, in Asia, the return correlations of Bitcoin and Indian stock markets have increased by 10-fold over the pandemic. This signifies limited risk diversification benefits of crypto, according to the IMF.
Risk sentiment among the crypto and equity markets could see a possible rise as the volatility correlations have increased by 3-fold.
"Crypto trading, however, soared as millions stayed home and received government aid, while low-interest rates and easy financing conditions also played a role," the IMF said.
According to the IMF, the inclusion of the growing acceptance of crypto-related platforms and investment vehicles in the stock market and the over-the-counter market could be the possible factors that have led to an increased interconnectedness of...
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