Massive validation for the crypto ecosystem.
In recent days, two events delivered massive validation for the crypto ecosystem:
- Paul Tudor Jones, one of the most successful hedge fund managers with a net worth of over $5 billion, bought Bitcoin as a hedge against the inflation he sees coming from central bank money-printing. This narrative has already been very strongly vocalized in the crypto community, but now it has been validated by one of the top-tier traditional investors.
- J.P. Morgan, the largest bank in the world, has onboarded Coinbase and Gemini as their first crypto clients. This is a clear sign that the crypto industry is rapidly maturing. Many will also remember that Jamie Dimon, J.P. Morgan CEO, declared bitcoin a fraud in September 2017. This is probably the highest-profile crypto U-turn ever.
On the other hand, one worrisome pattern has developed in recent weeks: the crypto market has become highly correlated to stock markets.
As seen in the Coin Metrics chart below, BTC-S&P 500 correlation has spiked to all-time record levels after the massive price dump on 12 March 2020. Developments in recent days signal that correlation is decreasing again, but this is one important metric to follow. We believe that stock markets will plunge much lower in the coming months, and if the crypto market can decouple from the stock market’s action, it would be huge!