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2021 was an interesting and volatile year for cryptocurrencies as bitcoin finished up 60% and ethereum finished an astonishing 350% higher. But those numbers only tell part of the story.

After putting in highs in November, both currencies have recently traded much lower, with bitcoin down 38% at its worst level and ethereum down 41%. Several catalysts emerged in 2021 that seemed to significantly affect crypto prices, from the IPO of Coinbase in April to the October launch of a bitcoin ETF comprised of CME Group futures contracts. One of the more unexpected developments in 2021, however, was the growing positive correlation between cryptocurrencies and risk assets like stocks.

Historically, one of the prized characteristics of crypto was that it was uncorrelated to other assets. This was viewed as valuable in keeping traders and investors somewhat diversified. Many traders believe that this recent increase in correlation is related to the Federal Reserve’s easy money policies that tended to push up a wide range of assets, including stocks, commodities, NFTs and crypto.

Josh Lim, head of derivatives at Genesis Global Trading, thinks that “as more sophisticated traders from macro trading firms and equity long/short firms continue to look at crypto as a complement to a tech portfolio and trade it like other risk assets, correlations should creep even higher in 2022.”

Tim McCourt, managing director of equity products and alternative investments at CME Group, believes that broader adoption in the crypto space has provided some validity. “The advent of Micro Bitcoin and Micro Ether contracts, alongside the regular size contracts, have helped both institutional and individual participation to continue to grow.” It’s a trend that accelerated into the end of 2021 at CME Group.

McCourt also believes that the launch of the futures-based ETF was a major factor in validating the space, noting that CME futures are at the center of price discovery and enable market participants to do what they do best. That means structuring products like ETFs using futures, validating the interrelatedness and the growth versus growth nature of the crypto ecosystem. “It’s great for the futures and it’s great for the market in general,” McCourt said.

The macroeconomic story of 2021 was a story of Fed easy money, coupled with talks of enormous government spending packages to counterbalance the negative effects of pandemic policy. The belief was that this was the perfect environment for cryptocurrencies if they truly were an inflation hedge.

This story appears to be changing dramatically in 2022. Talks of the Federal Reserve pivoting to a tighter monetary policy to combat inflation have pushed risk assets and cryptocurrencies lower over the last few weeks. Although Lim won’t go as far as to say that this would continue to force cryptocurrencies lower, he does admit that “2022 will see a lot more attention from crypto traders that hadn’t really thought about the Fed before on what their inflation policy is going to look like going forward.”

Of course, there are many unknowns ahead of us in 2022, ranging from pandemic headlines to potential for policy responses that could affect cryptocurrencies positively or negatively. As McCourt said, “We are excited to see what happens in 2022 as the question has evolved for investors and other participants from ‘should I be involved in crypto’ to ‘how much should I be involved in crypto.’”

Watch our full OpenMarkets Roundtable discussion on cryptocurrencies above. Watch other episodes here.



OpenMarkets is an online magazine and blog focused on global markets and economic trends. It combines feature articles, news briefs and videos with contributions from leaders in business, finance and economics in an interactive forum designed to foster conversation around the issues and ideas shaping our industry.

All examples are hypothetical interpretations of situations and are used for explanation purposes only. The views expressed in OpenMarkets articles reflect solely those of their respective authors and not necessarily those of CME Group or its affiliated institutions. OpenMarkets and the information herein should not be considered investment advice or the results of actual market experience. Neither futures trading nor swaps trading are suitable for all investors, and each involves the risk of loss. Swaps trading should only be undertaken by investors who are Eligible Contract Participants (ECPs) within the meaning of Section 1a(18) of the Commodity Exchange Act. Futures and swaps each are leveraged investments and, because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money deposited for either a futures or swaps position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles and only a portion of those funds should be devoted to any one trade because traders cannot expect to profit on every trade. BrokerTec Americas LLC (“BAL”) is a registered broker-dealer with the U.S. Securities and Exchange Commission, is a member of the Financial Industry Regulatory Authority, Inc. (www.FINRA.org), and is a member of the Securities Investor Protection Corporation (www.SIPC.org). BAL does not provide services to private or retail customers.. In the United Kingdom, BrokerTec Europe Limited is authorised and regulated by the Financial Conduct Authority. CME Amsterdam B.V. is regulated in the Netherlands by the Dutch Authority for the Financial Markets (AFM) (www.AFM.nl). CME Investment Firm B.V. is also incorporated in the Netherlands and regulated by the Dutch Authority for the Financial Markets (AFM), as well as the Central Bank of the Netherlands (DNB).

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