In a publication on Tuesday (26), Morgan Stanley revealed that cryptocurrencies were traded as risky assets due to stimulus from governments and central banks, but the Federal Reserve’s stricter policy meant that “impulse trading of cryptocurrencies driven by liquidity” was reversed.
According to the financial sector giant, the growth of bitcoin’s market capitalization has generally accompanied the growth of the global M2 money supply, pointing out that the cryptocurrency market capitalization has grown 10-fold since the beginning of 2020 amid central bank easing. Cryptocurrency market cap has dropped from a peak of $2,92 trillion in November last year to less than $2 trillion in the new survey.
However, even with the recent drop in cryptocurrency prices, the creation of digital assets is still high, with more than 100 created in the last week, mainly on decentralized exchanges, revealed Morgan Stanley, which further stated that growth in finance users decentralized services (DeFi) followed the prices of the Ethereum.
DeFi is a generic term used for lending, trading and other financial activities carried out on a blockchain, without the need to use traditional intermediaries.
Morgan Stanley further said that trading activity was weak during the bearish period. crypto market, with trading volumes of around $750 billion in March, half of their November 2021 peak. bitcoin price, said the bank.
Bitcoin has had a high correlation with equities since early 2020 and has had almost zero correlation with gold recently, notes Morgan Stanley, which further noted that the cryptocurrency has been most correlated with media and entertainment equities in the United States. States, as both are possibly driven by similar factors.
