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

Professor Andrew Urquhart is Professor of Finance and Financial Technology and Head of the Department of Finance at Birmingham Business School (BBS).

This is the tenth installment of the Professor Coin column, in which I bring important insights from published academic literature on cryptocurrencies to the Decrypt readership. In this article, I discuss how crypto’s relationship with equities has evolved.

Not so long ago, Bitcoin was marketed as the ultimate diversifier—an asset supposedly immune to whatever was happening in equity markets. Early academic work backed that up: Liu and Tsyvinski (2021) showed that major cryptocurrencies had minimal exposure to standard stock, bond and FX risk factors, and that their returns were mainly driven by crypto-specific forces like momentum and investor attention, not equity markets.

Fast-forward to the last couple of years, and that story looks very different. A growing literature now finds that crypto and equities are tightly intertwined, especially during stress. For a fintech audience, the key message is simple: you can’t treat crypto as “off-grid” risk anymore. It behaves more and more like a high-beta tech sector—with some nasty tail behaviour on top.

From “uncorrelated” to “just another risky asset”

A recent survey by Adelopo et al (2025) and co-authors reviews the evidence on how cryptocurrencies interact with traditional financial markets. They document clear time-varying and non-linear linkages between crypto and stock markets, with particularly strong connections during major macro and geopolitical events like COVID-19 or the Russia–Ukraine war.

Studies looking specifically at technology and blockchain-linked stocks confirm this. Umar et al (2021) finds strong connectedness between cryptocurrency markets and the technology sector while Frankovic (2022) shows that Australian “cryptocurrency-linked stocks” experience significant return spillovers from crypto prices, especially for firms more deeply involved in blockchain activity. In other words, listed equity is now a transmission channel for crypto risk.



What the newest evidence says

Several recent papers make the “crypto ↔ equity” link very explicit:

Global spillovers: Vuković (2025) uses a Bayesian Global VAR to show that adverse shocks originating in the cryptocurrency market depress stock markets, bond indices, exchange rates and volatility indices across a wide set of countries—not just the U.S.
Equity–crypto co-movement: Ghorbel and co-authors (2024) study connectedness between major cryptocurrencies, G7 stock indices and gold. They find that cryptocurrencies have become important senders and receivers of shocks, with stronger ties to equities in recent years and particularly during turbulent periods.
U.S. and Chinese stock markets: Lamine et al (2024) examine spillovers between U.S./Chinese equities, cryptocurrencies and gold. They find significant dynamic risk spillovers from crypto to these stock markets, again concentrated in high-volatility episodes.
Exchange-level contagion: Sajeev et al (2022) document a contagion effect of Bitcoin on major stock exchanges (NSE India, Shanghai, London and Dow Jones), using volatility spillover and correlation analysis from 2017–2021.

International organisations tell a similar story. An IMF departmental paper on “Spillovers Between Crypto and Equity Markets” finds that Bitcoin shocks can explain a non-trivial share (roughly mid-teens percent) of variation in global equity volatility, and that this influence has strengthened over time as institutional and derivative markets matured.

The common conclusion: crypto is now firmly embedded in the global risk ecosystem.

Why tech and crypto now move together

Why does Bitcoin now look so much like a high-beta tech stock?

Duration and interest-rate sensitivity: Both crypto and growth equities are essentially claims on uncertain future cash flows or network value. When real rates rise, discount factors bite hard—and both sectors sell off together.
Investor base and leverage: Retail trading, momentum strategies and derivatives are heavily used in both arenas. Products like futures, options and leveraged ETFs allow shocks in one market to be magnified and replicated in the other.
Institutional portfolio construction: As crypto has been added to multi-asset and hedge-fund portfolios, its returns inevitably become entangled with traditional cross-asset positioning. When funds de-risk, everything in the “risky bucket” goes out together.

What this means for portfolios and risk management

For portfolio construction, the message is uncomfortable but clear:

Crypto does diversify in quiet periods—correlations can still be modest in benign regimes.
But during stress, when diversification is most valuable, correlations and spillovers spike.
Bitcoin and major altcoins behave less like “digital gold” and more like levered proxies for global risk sentiment.

That doesn’t make crypto useless as an investment—but it does mean that treating a 5–10% crypto allocation as “uncorrelated upside” is no longer defensible based on the data.

Going forward, one open question for both academics and practitioners is whether spot ETFs and broader institutional adoption will further tighten these linkages, or whether a new use-case (such as genuine payment or settlement adoption) could create more idiosyncratic drivers again.

For now, the evidence points in one direction: when global markets catch a cold, crypto doesn’t sit it out anymore—it coughs along with everything else.

Selected academic references

Adelopo, I., et al. (2025). “Interconnectedness among cryptocurrencies and financial markets: A review.” Financial Innovation. SpringerLink
Frankovic, J. (2022). “On spillover effects between cryptocurrency-linked stocks and cryptocurrencies.” Global Finance Journal, 54, 100719. https://doi.org/10.1016/j.gfj.2021.100719 IDEAS/RePEc
Ghorbel, A., et al. (2024). “Connectedness between cryptocurrencies, gold and stock markets: A network approach.” European Journal of Management and Business Economics, 33(4), 466–489. Econstor
IMF (2022). Spillovers Between Crypto and Equity Markets. IMF Departmental Paper. IMF eLibrary IMF eLibrary+1
Lamine, A., et al. (2024). “Spillovers between cryptocurrencies, gold and stock markets.” Journal of Economics, Finance and Administrative Science, 29(57), 21–40. Emerald
Liu, Y., & Tsyvinski, A. (2021). “Risks and Returns of Cryptocurrency.” Review of Financial Studies, 34(6), 2689–2727. https://doi.org/10.1093/rfs/hhaa113 OUP Academic
Sajeev, K. C., et al. (2022). “Contagion effect of cryptocurrency on the securities market.” Journal of Economic Studies, 49(7), 1390–1410. PubMed Central
Umar, Z., Kenourgios, D., & Papathanasiou, S. (2021). “Connectedness between cryptocurrency and technology sectors: Evidence from implied volatility indices.” Finance Research Letters, 38, 101492. ScienceDirect
Vuković, D. B., et al. (2025). “Spillovers between cryptocurrencies and financial markets.” Journal of International Money and Finance, 150, 102963. IDEAS/RePEc