What’s Next for Cryptocurrencies? | Benzinga



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AT-A-GLANCE
  • Although historically uncorrelated to other assets, cryptocurrencies began to have a growing positive correlation with risk assets like stocks during 2021
  • Inflation, government spending and the potential for regulation will be in focus for traders looking at the crypto markets in 2022

2021 was an interesting and volatile year for cryptocurrencies as bitcoin finished up 60% and ethereum finished an astonishing 350% higher. But those numbers only tell part of the story.

After putting in highs in November, both currencies have recently traded much lower, with bitcoin down 38% at its worst level and ethereum down 41%. Several catalysts emerged in 2021 that seemed to significantly affect crypto prices, from the IPO of Coinbase in April to the October launch of a bitcoin ETF comprised of CME Group futures contracts. One of the more unexpected developments in 2021, however, was the growing positive correlation between cryptocurrencies and risk assets like stocks.

Historically, one of the prized characteristics of crypto was that it was uncorrelated to other assets. This was viewed as valuable in keeping traders and investors somewhat diversified. Many traders believe that this recent increase in correlation is related to the Federal …

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