Since the start of the Covid, the International Monetary Fund (IMF) has found a tenfold increase in the association between the bitcoin market and India’s stocks.
In a blog post published on August 21, the IMF noted that the increased connection may be attributable to insufficient risk diversification advantages in the bitcoin market. In addition, the IMF observed that the association between stocks and cryptocurrencies is pervasive across Asia, noting the rise of digital currencies in the area.
The agency hypothesized that it may be related to probable risk sentiment spillovers between the cryptocurrency and equities markets. Bitcoin (BTC) and other assets had no connection with Asian equities markets, which helped ease worries about financial stability, according to the report.
In the article, the IMF highlighted the need of building regulatory frameworks that concentrate on the usage of certain digital assets inside a nation to regulate the crypto industry.
The organization tasked the area with implementing harmonized rules across jurisdictions. Amid high inflation and rising interest rates, crypto and stocks have grown their worldwide correlation outside of Asia.
In May, Finbold said that the correlation between Bitcoin and the S&P 500 had reached an all-time high and that this was a significant assertion.
The company has indicated that the correlation suggests that the volatility of the cryptocurrency market can expand to the equities market, which would create a threat to the stability of the financial system.