‘BTC’s return correlation, Indian stock market has increased tenfold’: IMF

‘Return Correlations of BTC, Indian Stock Markets Have Risen Ten-Fold

Despite the current regulatory uncertainty in India, the crypto industry seems to have had a random collection. According to the International Monetary Fund (IMF), the return correlation between bitcoin and the Indian stock market has increased tenfold in the post-pandemic world. This is indicative of the limited risk diversification benefits of cryptocurrencies. At this point, according to the IMF, the correlation between the performance of crypto assets and overall Asian equity markets has grown substantially.

The adoption of crypto in Asia by retail and institutional investors, many of whom also participate in equity markets, has emerged among the key drivers of the growing interconnectedness of crypto and equity markets in Asia.

“We have found that there has been a sharp increase in crypto-equity volatility spillovers in India, Vietnam and Thailand, along with an increase in crypto-equity correlations in Asia,” the IMF said in a statement. blog post,

This is not the first report released recently that has shed light on the expansion of crypto culture in the Asian continent.

In early June, an Accenture report detailed that in Asian countries such as India, Vietnam, China, Indonesia, Japan, Malaysia, Singapore and Thailand, holdings of crypto and other digital assets have increased manifold in recent years. Has been. Asians worth up to $1 million (about Rs 7 crore) across the continent are investing in virtual assets to diversify their investment portfolio, the report said.

According to the findings, residents of Thailand and Indonesia hold the highest percentage of digital assets in Asia, followed by India, Singapore and Thailand.

Meanwhile, India accounts for up to 7% on the chart representing the percentage of crypto and NFT holdings in Asia. This puts India ahead of Singapore, Japan and Vietnam – showing six per cent, three per cent and four per cent respectively in digital asset holdings on the Accenture survey graph.

For now, crypto makes up the fifth largest asset class in Asia.

While the IMF’s findings suggest a positive growth outlook for the crypto sector in Asia, it also paves the way for related issues.

According to the Post, this growing interrelationship between the two asset classes allows for the transmission of shocks that could affect financial markets.

The global financial body has called for the creation of relevant laws that will protect these growing numbers of crypto investors from financial risks as soon as possible.

“A significant effort is needed to address the critical data gaps that still prevent domestic and international regulators from fully understanding the ownership and use of crypto and its intersection with the traditional financial sector,” the IMF said.

While South Korea and Japan are experimenting with different elements of the cryptoverse such as CBDCs and the metaverse, Thailand and Indonesia are focusing on incubating in-house crypto exchanges and tightening regulations around crypto crimes.

In India, while start-ups are experimenting with the crypto, web3 and blockchain sectors, they are treading lightly due to the lack of clarity in regulations.

The Reserve Bank of India (RBI) supports restrictions on the cryptocurrency sector, Finance Minister Nirmala Sitharaman told Parliament in July.

Calling for global support on crypto regulations, Sitharaman said that the RBI is concerned that the participation of cryptocurrencies in India’s existing financial systems could have a destabilizing effect on the country’s monetary and financial stability.

Earlier this year, tax laws on virtual digital assets came into force in India, but the country is still waiting for a detailed framework for the crypto sector.

Cryptocurrency is an unregulated digital currency, is not legal tender and is subject to market risks. The information in this article is not intended to be financial advice, trading advice or any other advice or a recommendation of any kind offered or endorsed by NDTV. NDTV shall not be liable for any loss arising out of any investment based on any alleged recommendation, forecast or any other information contained in the article.


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