IMF: Bitcoin is growing as it transforms into "an integral part of the digital exchange market."

Although cryptocurrencies are not a viable asset in the financial ecosystem, a new study by the International Monetary Fund (IMF) has found that Bitcoin (BTC) and other cryptocurrencies have weakened due to their relationship with the stock market. “Coverage of investments” of the International Monetary Fund).

A blog post featuring the research highlights the risks of integrating digital assets and financial markets. Relationship between cryptocurrencies and commodities "poses a risk," according to an article written by Tobias Adrian, director of the IMF's Monetary and Capital Markets Department, and Tara Iyer, chief economist, financial analyst, and Mahvash Qureshi, IMF Research Director. institute. . The results differ, increasing the risk of infection throughout the financial system. "

The letter states that “cryptographic assets like Bitcoin have gone from being an uncertain asset with few users to being an important digital asset exchange,” adding that these changes affect financial security.

Noting that BTC and ETHer (ETH) have little to do with major commodities before the spread, the authors suggest that crypto assets help investors differentiate their risk from the risk of conflict of interest on other assets. I agree. “However, everything has changed since the introduction of foreign financial institutions in early 2020,” the authors wrote, adding that cryptocurrencies and commodities have risen sharply because investors have higher risk.

The correlation coefficient between BTC and S&P 500 has increased by 3,600% since April 2020, from 0.01 to 0.36. This means both asset classes have gone up and down since the onset of the coronavirus.

IMF experts say the better the relationship, the greater the Bitcoin risk. The combination of cryptocurrencies and the stock market can lead to losses that could make financial markets unstable. Noting that crypto-assets are not in the financial zone, the authors conclude:

“Depending on their volatility and volatility, their increasing consolidation could pose a risk to financial security, especially in countries where cryptocurrency adoption is widespread. "

Experts also called for a comprehensive international regulatory framework “to guide national policy and governance and reduce financial security risks to the cryptocurrency ecosystem.”

Last month, IMF chief economist Gita Gopinath called for international regulation of cryptocurrencies. He believes that if the country bans cryptocurrencies, it will lose control over coastal exchanges that are not covered by its own policies.