Crypto
Risk Appetite Fuels Bitcoin-Stock Market Correlation
The relationship between Bitcoin and traditional stock markets is more complex than it seems.
On some days, both markets move sharply higher together, but this connection changes constantly.
A key link is risk appetite. Markets tend to shift between two moods: risk-on and risk-off.
During a risk-on environment, investors become more willing to take on assets with higher potential returns, such as Bitcoin and technology stocks.
The 2020 IMF study found that spillovers between Bitcoin and equity markets increased substantially after 2020 due to growing crypto adoption and easier financial conditions.