The International Monetary Fund (IMF) shared its analysis of the increasing adoption of digital assets in correlation with securities.
The International Monetary Fund (IMF) is an international organization of the UN. The IMF agency is headquartered in Washington DC. This financial agency is supported by a total of 190 countries. The main goal of this agency is to support & propose the frameworks & ideas to enhance global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty across the world.
On 21 August, The IMF agency published its report on the increasing investment in Cryptocurrencies and Securities under a significant correlation between these two markets in terms of volatility index.
According to this International financial agency, before the Covid-19 pandemic, there was very little correlation between the securities and Cryptocurrency market but now this surged by more than 10 fold just after the Covid pandemic in India.
IMF agency said:
“Key drivers of the increased interconnectedness of crypto and equity markets in Asia could include growing acceptance of crypto-related platforms and investment vehicles in the stock market and at the over-the-counter market, or more generally growing crypto adoption by retail and institutional investors in Asia, many of whom have positions in both the equity and crypto markets.”
The correlation between the crypto & securities market is seen in Asian countries mainly India, Thailand, and Vietnam.
According to the IMF, the possible reason behind the increasing correlation between these two markets took place because of the spontaneous decrease in the risk associated with big market cap assets like Bitcoin, Ethereum, etc.
“Before the pandemic, crypto seemed insulated from the financial system. Bitcoin (BTC) and other assets showed little correlation with Asian equity markets, which helped diffuse financial stability concerns.”
Covid-19 & impact on small income generators
When the Covid-19 pandemic was at its peak level in mid of 2020 then at that time many people lost their jobs. To generate revenue by sitting at home, the majority of the people started to do online activities like freelance work, blogging & investment in the stock & crypto market.
Due to the sudden inflow of funds in the crypto market, the crypto market showed a bullish increment in the prices of assets and that attracted not only new investors but also stock market Investors.