Professor Coin: When Bitcoin Sneezes—How Crypto and Equities Caught the Same Cold

Core Insights - The relationship between cryptocurrencies and equities has evolved from being perceived as uncorrelated assets to being recognized as interconnected, particularly during periods of market stress [2][3][4]. Group 1: Historical Perspective - Initially, Bitcoin was viewed as a diversifier, with early studies indicating minimal exposure to traditional financial risks [2]. - Recent literature indicates that cryptocurrencies are now closely linked to equity markets, especially during significant macroeconomic and geopolitical events [4]. Group 2: Recent Findings - A survey by Adelopo et al (2025) highlights time-varying and non-linear relationships between cryptocurrencies and stock markets, with stronger connections during crises like COVID-19 and the Russia-Ukraine war [4]. - Research by Umar et al (2021) and Frankovic (2022) shows that technology and blockchain-linked stocks are significantly affected by cryptocurrency price movements, indicating that equities serve as a transmission channel for crypto risk [5]. Group 3: Evidence of Interconnectedness - Vuković (2025) demonstrates that negative shocks in the cryptocurrency market can adversely impact stock markets, bond indices, and exchange rates globally [6]. - Ghorbel et al (2024) find that cryptocurrencies have become significant transmitters and receivers of shocks, particularly during turbulent market conditions [6]. - Lamine et al (2024) reveal dynamic risk spillovers from cryptocurrencies to U.S. and Chinese stock markets, especially during high-volatility episodes [6]. - Sajeev et al (2022) document a contagion effect of Bitcoin on major stock exchanges, indicating a correlation between cryptocurrency volatility and stock market performance [6].