As Macro Fears Drive Up Cryptocurrency Prices, Invest In Crypto Assets
Inflation hit a new high, this time hitting 8.5% for March in its fastest gain since 1981. The past seven days have seen cryptocurrencies tumble as investors braced for the news of the coronavirus pandemic. CPI, bitcoin’s correlation to risky assets remaining high, according to report by Arcane Research.
Bitcoin tends to be highly correlated to risky assets during times of macro fears when advisors and investors take a risk-free approach. The popular cryptocurrency currently remains highly correlated to Ether over a 90-day period at 0.91, its highest correlation rate since June 2020, and the 90-day correlation for the S&P 500 was the highest ever recorded two weeks ago at 0.52.
“As we approach mid-April, we are seeing a broad correction across the broader crypto market, with most coins following each other closely on the downside,” writes Jaran Mellerud, analyst at Arcane Research and author of the report. .
Stablecoins have received a boost as investors react to macro concerns and inflation, with many who want to remain crypto-allocated moving their funds to tether (USDT) and USD coin (USDC), a crypto -currency pegged to the US dollar. USDC is run by Center and includes representatives from Bitmain, a bitcoin mining company, as well as Coinbase, a major cryptocurrency exchange.
USDT has seen a 0.58% gain in cryptocurrency market cap so far in April, while USDC has gained 0.31% in market cap at a time when bitcoin is not gained only 0.05%.
“The market continues to take crypto investors on an emotional roller coaster. For the third time in 2022, market sentiment skyrockets into the ‘greed’ realm, only to fall back into fear territory shortly thereafter. Will the repeated disappointments of 2022 make market participants more cautious to be optimistic,” asks Mellerud.
Invest in crypto assets with Bitwise
For investors who want to invest in the innovation of the crypto economy but do not want to run the risk of direct exposure, the Bitwise Crypto Industry Innovators (BITQ) ETF could be a good solution. BITQ offers investments in some of the biggest crypto companies in a variety of segments, offering the potential benefits that come with diversification.
BITQ tracks the Bitwise Crypto Innovators 30 Index, an index with at least 85% allocation to cryptocurrency exchanges carrying bitcoin and other cryptocurrencies, crypto miners, mining equipment companies and service providers. The remaining 15% is allocated to large-cap support companies with at least a large portion of their business dedicated to crypto.
BITQ features crypto companies that continue to drive their growth and that of the broader crypto economy, including Coinbase Global Inc (COIN) at 9.16%.
The fund has an expense ratio of 0.85% and net assets of $107 million.
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