Academic research increasingly indicates a strong connection between cryptocurrencies and equities, particularly during stressful periods. Recent studies highlight that cryptocurrencies are beginning to emulate the behavior of high-beta tech sectors. A consensus is emerging among academics that cryptocurrencies have become an integral part of the global risk ecosystem.
Professor Andrew Urquhart, a finance and fintech expert at Birmingham Business School, shares insights into this evolving relationship in his Professor Coin column. Initially, Bitcoin was hailed as a unique diversifier, an asset unaffected by equity market fluctuations. Early studies supported this view; for example, Liu and Tsyvinski (2021) found that major cryptocurrencies had limited exposure to typical stock, bond, and FX risk factors, with returns driven by crypto-specific factors like momentum and investor attention. However, recent years have shown a different picture, with a growing body of literature suggesting that cryptocurrencies are now closely linked with equities, especially during periods of market stress.
A survey by Adelopo et al. (2025) highlights the time-varying and non-linear relationships between cryptocurrencies and stock markets, noting strong connections during significant macroeconomic and geopolitical events, such as the COVID-19 pandemic and the Russia-Ukraine conflict. Specific studies focusing on technology and blockchain-linked stocks corroborate these findings. Umar et al. (2021) identified a strong connection between cryptocurrency markets and the tech sector, while Frankovic (2022) observed significant return spillovers from crypto prices to Australian cryptocurrency-linked stocks, particularly those deeply involved in blockchain activities. This suggests that listed equities now serve as a transmission channel for crypto risk.
Recent papers further elucidate the crypto-equity link. Vuković (2025) used a Bayesian Global VAR to demonstrate that negative shocks from the cryptocurrency market can depress stock markets, bond indices, exchange rates, and volatility indices globally. Ghorbel and colleagues (2024) examined the connectedness of major cryptocurrencies with G7 stock indices and gold, finding that cryptocurrencies have become key transmitters and receivers of shocks, with stronger ties to equities, especially during turbulent times. Lamine et al. (2024) explored the spillovers between U.S. and Chinese stocks, cryptocurrencies, and gold, finding significant dynamic risk spillovers, particularly in high-volatility episodes. Sajeev et al. (2022) documented Bitcoin's contagion effect on major stock exchanges like NSE India, Shanghai, London, and Dow Jones from 2017-2021.
International organizations, such as the IMF, echo these findings. An IMF paper on "Spillovers Between Crypto and Equity Markets" reported that Bitcoin shocks account for a considerable share of global equity volatility variation, with influence growing as institutional and derivative markets mature. The overarching conclusion is clear: cryptocurrencies are now entrenched in the global risk ecosystem.
The reasons behind the close movement of tech stocks and cryptocurrencies include their sensitivity to duration and interest rates. Both sectors are essentially claims on uncertain future cash flows or network value, making them vulnerable to rising real rates. Additionally, both sectors share a similar investor base and leverage, with heavy use of retail trading, momentum strategies, and derivatives. Institutional portfolio strategies have also intertwined crypto with traditional assets, causing them to move together during risk-off periods.
For portfolio management, the implications are significant. While cryptocurrencies can offer diversification during calm periods, stress scenarios see correlations and spillovers spike, aligning Bitcoin and major altcoins more with global risk sentiment than with "digital gold." This doesn't render crypto investments useless but challenges the notion that a 5-10% crypto allocation provides uncorrelated upside. The future remains uncertain, with questions about whether spot ETFs and broader institutional adoption will further tighten these linkages or whether new use cases might reintroduce unique drivers. For now, when global markets falter, cryptocurrencies no longer stand apart—they react alongside other assets.