Over the past two years, cryptocurrencies have attracted a lot of attention, considerably more so than the initial bull run they experienced in 2017 and 2018. Most people now view Bitcoin (BTC) as an investment that functions as a store of value, much like gold.
Instead of setting up a cryptocurrency exchange to compete with Coinbase and other companies, Nasdaq has over the years given the technology to participants in the cryptocurrency industry.
According to a September 20 Bloomberg story quoting the company’s president of North American markets, Tal Cohen, Nasdaq Inc. (NASDAQ: NDAQ) is now making its first foray into cryptocurrency by recruiting a new team in charge of digital assets. The first achievement is to provide institutional investors with custody services for Bitcoin and Ethereum (ETH).
According to Cohen, “In recent years, institutional investors have become more interested in investing in digital assets, and Nasdaq is well-positioned to accelerate broader acceptance and promote sustainable growth.”
Liquidity and execution services will be incorporated into the sophisticated custody system that Nasdaq Digital Assets aims to develop. With an additional layer of security and safety, the emphasis will be on the industry’s connection, availability, and efficiency challenges. Regulatory permission is necessary for the offering.
He also added:
“With our trusted brand and strong track record as a technology provider for the global capital markets, Nasdaq is uniquely placed to address industry pain points by improving liquidity, scalability, and resiliency, with the goal to engender greater trust and confidence in the digital assets ecosystem.”
Correlation of the markets Despite the fact that equities and cryptocurrencies are completely distinct types of assets, the stock market and cryptocurrencies marched in lockstep during the most of the significant ups and downs investors experienced in 2022.
Although it recently broke a record, BTC’s correlation with the S&P 500 is now at its highest point in respect to other conventional assets. According to recent Kaiko study, as inflation tends to devalue all assets, it is high and erratic inflation that is mostly to blame for the past month’s positive correlation between bonds and risk assets.
“Bitcoin’s correlation with both bonds and equities has resumed its increase in September after declining over the summer. Inflation uncertainty coupled with Fed tightening has resulted in a historical decline in both risk and fixed-income assets, challenging traditional asset allocation approaches.” When it comes to the synchronisation of equities and cryptocurrencies, investors should keep in mind that it might be a good thing for the digital asset sector as a whole.
Cryptocurrencies are risk assets that trade similarly to other hazardous assets, and the greater their integration into conventional portfolios, the higher the projected connection with other asset classes.
- A cryptocurrency custody service for institutions is about to begin on Nasdaq
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