Citi: Correlation Between Equity Markets, Bitcoin Weakens Following FTX Collapse

Decentralized exchanges have gained market share as confidence in their centralized equivalents have declined, the report said.

By Will Canny

Nov 14, 2022 at 12:17 p.m. UTC

Updated Nov 14, 2022 at 4:58 p.m. UTC

CDCROP: Wheat Silos Farming Farmland (Shutterstock) — Knock-on effects from the collapse of FTX are fairly well siloed within crypto. (Shutterstock)

Will Canny

Will Canny is CoinDesk's finance reporter.

The correlation between the S&P 500 and bitcoin (BTC) has weakened as crypto markets suffer after the FTX and Alameda Research collapse, Citigroup (C) said in a research report last week.

The S&P 500 gained almost 6% last week, whereas bitcoin fell by about 20%.

Traditional financial markets have been largely unaffected by the collapse in an indication that “contagion effects are relatively siloed within crypto,” the report said.

Given the magnitude of the fallout, it's not yet certain if contagion into other asset classes has been avoided, but the digital asset sector remains relatively small compared with traditional markets, the report added.

The bank notes that decentralized exchanges’ volumes have surged as much as 30% so far this month, increasing market share over centralized exchanges such as FTX, “amidst centralized custody fears.”

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