Correlation between equities and crypto has increased due to adoption

The market selloff is heavily tied to the increased correlation between equities and crypto, as crypto-friendly institutions are going more risk-off

article-image

Artwork by Crystal Le

share

This is a segment from the Empire newsletter. To read full editions, subscribe.


It’s a bloodbath, no matter where you look.

And unfortunately, there’s no denying equities and crypto are interconnected this time around. 

ETH’s trading just a few hundred dollars above where it was around the time FTX collapsed in November 2022, while bitcoin’s maintained a sizable distance from that figure (a cool $65,000 above where it was at the time of the collapse, if you want a positive number).

A look at ETH

Justin Barlow, head of BD & Investments at Sei, told me it’s hard to pinpoint any bottom, not just the bottom, but right now, we’re very much tied into the macro narrative. 

If sentiment were to flip, then he wouldn’t be surprised if crypto changed its tune and we started to see more green pop up on various charts. 

“If you look at historical correlations between the equities market and crypto, it’s seemingly increased over time as crypto becomes more and more mainstream. And I think that’s to be expected right now: You have a lot of the big names that are active in traditional markets, very active in crypto markets, and naturally, when they want to be risk off, that translates into not just obviously equities, but the crypto market as well,” Barlow explained. 

Basically, when things are good, having BlackRock and other big financial giants in the space is great. But when things go sideways, well, crypto’s one of the first trades that gets cycled out. 

In the short term, this leaves crypto in a bad spot. Continue to expect a bit more pain until there’s more favorable economic data, but this doesn’t change the thinking that, long term, crypto is still looking strong. 

This is just one of the first cycles, Barlow said, where we’re seeing the mesh of traditional financial institutions and crypto play out. 

“Not to say that there aren’t opportunities for crypto to diverge from traditional markets, but it’s certainly a factor, particularly for some of the larger assets,” he added. 

The cycles are happening “much faster,” and he wouldn’t be surprised if we start to see some excitement “bubble back up” in the “near future.”

“I think the important thing is just looking at things from the long term and thinking about it in terms of the underlying metrics that matter, and growth that matters [to] users, rather than just intraday price fluctuations,” he told me. 

This is just an unfortunate side effect of adoption, I guess.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template.png

Research

The march toward an interoperable and onchain-by-default internet depends on reliable messaging and value transfer across heterogeneous domains. Crosschain protocols now process >$1.3T in combined annual transfer volume and secure tens of millions of user interactions, yet no single design dominates.

article-image

The goal, per Santiago Santos, is to make crypto a relatable piece of tech for people who may not even understand it

article-image

Stripe stablecoin unit aims to operate under a federal charter enabling regulated stablecoin issuance and custody services

by Blockworks /
article-image

Will TradFi make crypto better or create more problems than it solves?

article-image

Subtle decisions by risk curators saved Aave from significant turmoil

article-image

The new Rootstock Institutional unit aims to connect professional investors to Bitcoin-native yield and liquidity strategies anchored in BTC’s security layer

by Blockworks /
article-image

DOJ files record civil forfeiture against more than 127,000 BTC linked to scam activity

by Blockworks /