In a publication of the financial strategist of Deutsche Bank Masao Muraki said that crypto-currencies increasingly correlated with the CBOE Volatility Index, better known as the “Fear Index” on Wall Street,. According to the investigation, there is a correlation in the way that a market environment, encourages low-volatility investors to invest in riskier investments such as crypto-currencies, so as to achieve higher returns.
The Deutsche Bank had already commented some months ago on the topic of crypto-currencies and Bitcoin. In November of last year, a chief strategist of Deutsche Bank, Jim Reid, had published a analysis. In this he wrote that the Fiat money system have an end, and crypto-currencies such as Bitcoin could play in the global financial market.
In the current study Masao Muraki writes, as reported by Business Insider UK that the low volatility on the traditional exchanges, forcing institutional investors of this world, in the risk of crypto-currency market richer, to achieve higher yields.
As Muraki writes, is the market volatility in traditional equity markets, as measured by the Chicago Board Options Exchange (CBOE) volatility index (VIX), close to an all-time low.
The VIX is a market estimate of future volatility in the stock market. The record does not mean low for professional investors that the stock market offers a lot of Speculation and, therefore, unattractive. This leads to the fact that large investors in crypto-currencies richer in speculation, escape and the cryptocurrency market as a Whole, the reasoning of the German Bank.
This is also the reason for the enormous increase in the cryptocurrency markets in the last few months.
The opposite effect – crypto-currency market deep in the Minus
Correlation means that the correlation between equities and crypto-currency market can turn around.
From our point of view, it seems to be just as well likely that the current market is causing the situation on the crypto currency market, almost all Crypto-currencies are a deep red in the Minus, due to the withdrawal of institutional capital. This capital, in turn, could be in the traditional stock market returned. The Dow Jones has risen since the beginning of the year by nearly 1,500 points.
In contrast, the market capitalization of all crypto-currencies of approximately 500 billion euros on 01.01.2018 to the current level of around 420 billion euros in favor. There is a correlation, as described by the German Bank, seems to be in the other direction, probably, and possible.
In this respect, it is recommended from our point of view, to keep the stock market in the eye. By the Mainstream adaptation, including through the launch of Bitcoin Futures in the last year, may be flowed strengthened institutional capital in the crypto currency market. The German Bank also noted that increasing the correlation between equities and crypto – currency market.
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