In its latest report, the International Monetary Fund (IMF) stated that Bitcoin (BTC) and other crypto assets pose a risk to global financial markets due to their high correlation with traditional assets.
The uncontrolled printing of money by central banks to alleviate the negative conditions of the pandemic is shown as the main reason for the increasing relationship between cryptocurrencies and stock indices.
The IMF states that the decline experienced by Bitcoin may trigger other decreases as well. The correlation between stocks and cryptos tends to rise during times of increased volatility.
Recently, Bitcoin has been performing quite similarly to the S&P 500 and Nasdaq. According to data provided by Kaiko, the correlation coefficient has reached its highest level since 0.61 in July 2021.
The IMF concluded that Bitcoin failed as a portfolio diversifier as it performed similarly to equities.
Bitcoin is trading at $42,711 at the time of writing, according to CoinMarketCap data.