Curriculum·S206 Macro, Cycles, and Narrative·about 31 min
Macro drivers
By the end of this lesson you can
- →State what correlation measures, what it does not, and why a correlation figure requires a window
- →Report the measured change in crypto and equity correlation, and what it did to the diversification claim
- →Distinguish a driver from a co-movement, and say what evidence would separate them
- →Locate an asset on the risk spectrum by behavior rather than by narrative
Sophomore · enrolled learners
This lesson opens with The uncorrelated asset, measured.
- What happened
- The International Monetary Fund published a Global Financial Stability Note in January 2022 examining spillovers between crypto and equity markets. Before the pandemic, bitcoin and the S&P 500 showed a correlation of about 0.01 over 2017 to 2019, consistent with the widely repeated claim that crypto was an uncorrelated asset offering diversification. Over 2020 to 2021 that figure rose to about 0.36. Intraday volatility of bitcoin and ether became roughly four to eight times more correlated with US equity indices than in the earlier period, and the analysis estimated that bitcoin and tether together explained around 19 to 23 percent of the variation in the volatility of major global equity indices, and around 12 to 17 percent of the variation in their returns, in the post-pandemic period.
- The decision point
- The diversification claim was true when it was first made and it was being repeated years after it had stopped being true, by people holding the asset for that reason. Nobody falsified it, because a correlation is a measurement over a window and almost nobody attached a window to the claim. A property of an asset in one period was carried forward as a property of the asset.
What you will be able to answer
- →What does a correlation figure require to be meaningful?
- →What did the measured correlation do?
- →What is the difference between a driver and a co-movement?
- →How do you locate an asset on the risk spectrum?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://www.imf.org/-/media/Files/Publications/gfs-notes/2022/English/GFSNEA2022001.ashx
- https://www.imf.org/en/blogs/articles/2022/08/21/blogs-crypto-asian-equities-082122
- https://www.imf.org/-/media/files/publications/wp/2023/english/wpiea2023163-print-pdf.pdf
- https://www.coindesk.com/research/market-spotlight-the-19-billion-liquidation-that-shook-crypto
Confidence medium·Volatility high·Reviewed 2026-08-06·Owner unassigned
Contested
Correlations between crypto and equities have moved substantially since the period studied, in both directions, and any figure quoted here is a historical measurement rather than a current property. Re-check at review and never present a correlation without its window.
Whether the observed co-movement reflects a shared response to liquidity conditions, a common investor base, or crypto having become a risk asset in its own right is genuinely debated. The lesson presents the measurement and the candidate explanations without adjudicating.