Cryptocurrencies pose contagion risk by moving in sync with stocks, IMF says – The National

Cryptocurrencies pose contagion risk by moving in sync with stocks, IMF says – The National

The correlation between cryptocurrency assets and traditional assets such as stocks increased significantly and raised the risk of contagion across financial markets, according to the International Monetary Fund.

Cryptocurrency assets are no longer on the fringe of the financial system. Given their high volatility, their increased co-movement with stocks could soon pose risks to financial stability, especially in countries with widespread cryptocurrency adoption, the Washington-based fund said in a blog post on Tuesday.

Before the Covid-19 pandemic, cryptocurrency assets such as Bitcoin and Ether showed little correlation with major stock indexes, said Tobias Adrian, one of the blog's writers and financial counsellor and director of the IMF’s monetary and capital markets department.