Crypto Correlation – True or False?

Crypto was originally supposed to be viewed as an independent outlier to the traditional market offerings (such as gold, oil and stocks), however as evidenced by the changes in the Crypto Market experienced since the Pandemic began in 2020, it is now being speculated that there is correlation between the two.

The Pandemic is what really bought to the forefront the speculation that there is indeed correlation between traditional market offerings and crypto as it was evident that investor confidence in both crypto and traditional offerings was being guided by market sentiment which made investors more or less risk adverse depending on what was occurring.

This correlation is a strong indication that the crypto sphere is maturing and is being seen as more of a legitimate endeavour as opposed to a risky gamble, and it’s a trend that should be closely monitored for a range of reasons to be better placed to act in the future, and it can be seen that there are both positives and negatives in such a scenario.

One of the driving forces between the correlation between the two is the growing acceptance of crypto technologies and adaptation in real world scenarios. 

With larger and more traditional industry players starting to dip their toes into the crypto stream, and crypto entering the public consciousness, Crypto has started to move out of its niche and wild west beginnings and is starting to mature.

As with all things that mature, there will be changes at play, but change is necessary for growth and survival.

Among the changes that are set to come into force, sooner rather than later, will be a global regulatory approach being set in place to ensure that there are protections in place for investors, as well as safeguards in place for Governments to be better placed to implement taxes and controls that will aim to protect citizens and allow the Government to get in on the action by exerting a level of control over the industry and benefiting from taxation on the Cryptosphere.

Australia is one such country that has been keeping a close eye on Cryptocurrencies, with a special task force being set up to monitor the industry and provide advice, and in 2022 the tax department focused keenly on those who had crypto holdings to ensure that they were meeting their taxation requirements.

While most won’t be too keen on increased taxes, by legitimising the industry as a whole and being able to rely on better protections and safeguards this will bring in more investors and help sure up the cryptoworld for the future, so we will look forward to keeping a close eye on upcoming correlations.