Are Crypto and Traditional Finances More Similar Than You Think?

• Last week the price of bitcoin dropped by half leaving many investors significantly worried about the future of the digital asset. 
• Due to a massive sell-off in the market, the price saw its biggest loss for a significant time.

Last week on the 12th of March, the leading cryptocurrency recorded one of its biggest single-day losses in history. The price of bitcoin dropped by half leaving many investors significantly worried about the future of the digital asset. Due to a massive sell-off in the market, the price saw its biggest loss for a significant time. The sell-off pressure was all across the market with other cryptos seeing price crashes of up to 30% from the last seven days.

The price action for bitcoin is very similar to that of the traditional financial markets which also saw a big crash due to the outbreak of coronavirus. The crypto markets have traditionally remained uncorrelated which makes this quite unusual given the similarities.

According to a review by coinmetrics, the Pearson correlation index between bitcoin and S&P 500 rose to a new all-time high of 0.52 on the 12th of March. This shows how strong the connection between the two industries and markets have become over the years. The previous figure was 0.32, proving that the cryptocurrency market is a serious asset to deal with.

Looking into the causes of such a strengthened correlation between the two markets, we can see that there was a massive sell-off in both the crypto and equity industries. 

It will be interesting to see how this situation plays out. For more news on this, the Bitcoin Price and other crypto updates, keep it with CryptoDaily!