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CRYPTO MARKET: Why does it follow the NASDAQ ?

" We therefore confirm the strong positioning on quality securities with greater international diversification and a solid financial structure with inflation protection. On financials, our idea is to favor those stocks that are less exposed to the cost of risk, benefiting from rising rates, structural trends, excellent competitive positioning and solid capital endowment. On industrials, we maintain a selective approach by favoring stocks that have proven to have "pricing power" even in recessionary market environments or that have specific catalysts. Idea of the Week: Banca Mediolanum "

This is a Weekly Review provided by Banca Mediolanum that gave me much food for thought:

the suggestion given by the bank is therefore basically to give an eye to companies "less exposed to the cost of risk" and with some "pricing power."

The interest rate, as you well know, is a rudder for a country's economy and often an anchor for corporate finances. The same with regard to intrinsic features of corporate policies such as pricing power and other economics.

Without getting too much into rhetoric, we certainly cannot say that the recent downturns in the stock market have been unwarranted by expectations about market fundamentals. Simply put, there is a reason for prices to flex.

But what about cryptos? How come their returns are so negative?

Statistically, BTC has a positive and high correlation index with the NASDAQ and at the same time an equally high but negative one with the DXY. However, these are not fundamental reasons but rather technical consequences.

The question we would like to ask the audience of crypto traders and investors are: why do you think the decentralized market is experiencing this downturn if the finances of the companies that make up that market are disconnected to the trend of interest rates?

Could it be about the energy crisis directly impacting the Mining centers?

Is decentralized finance perhaps not so disconnected with traditional finance?

Does the banking and institutional circuit simply follow the typical investment logic of the stock market to invest in cryptocurrency?


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