From Financial Modeling Prep: 2025-02-05 01:20:02

Cryptocurrency markets are expected to weaken their correlation with equities as the digital asset ecosystem matures, leading to more independent price movements driven by market-specific factors, according to Citi Research analysts.

Despite heightened correlations during market turbulence, a structured regulatory environment in the U.S. is anticipated to foster idiosyncratic price trends in the crypto sector, stated Citi’s lead strategist Alex Saunders.

Cryptocurrencies saw an increase in market capitalization relative to U.S. equities in 2024, indicating sustained investor interest amidst regulatory scrutiny, with Bitcoin playing a significant role as a potential “digital gold” store of value.

Bitcoin’s correlation with gold provides insights into its evolving role, though Citi Research remains cautious due to its high volatility compared to traditional safe-haven assets, driven more by speculation and optimism for blockchain adoption.

Institutional adoption of spot crypto ETFs is growing, decoupling cryptocurrency prices from broader equity markets, with Citi recommending a 1-5% Bitcoin allocation in multi-asset portfolios for enhanced returns, despite increased volatility.

As the cryptocurrency market matures and regulatory clarity improves, it is expected to exhibit more independent price behavior, solidifying its status as a unique financial asset. Investors can leverage Financial Modeling Prep’s Crypto Currency Free API for real-time and historical data-driven insights on trends, correlations, and macroeconomic influences.



Read more at Financial Modeling Prep:: Bitcoin and Macroeconomics: How U.S. Equities and …