A hedge against the traditional market? Nope, crypto assets are now looking closer in risk profile to oil and gas, or EV stocks like Tesla, says Coinbase Institute’s chief economist.

Despite some touting crypto as a hedge against traditional markets, digital assets today share a similar risk profile to commodities such as oil and gas, and tech and pharmaceutical stocks, according to an analysis from Coinbase’s chief economist. 

The observation comes from a blog post from Coinbase chief economist Cesare Fracassi on Wednesday, noting that the “correlation between the stock and crypto-asset prices has risen significantly” since the 2020 pandemic.

“While for the first decade of its existence, Bitcoin returns were on average uncorrelated with the performance of the stock market, the relationship increased quickly since the COVID pandemic started,” stated Fracassi:

“In particular, crypto assets today share similar risk profiles to oil commodity prices and technology stocks.”

The economist referred back to his institute’s monthly insights report in May, which found that Bitcoin (BTC) and Ether (ETH) have similar volatility to commodities such as natural gas and oil, fluctuating between 4% and 5% on a daily basis.

Bitcoin, which is often referred to as the digital gold, has a far riskier profile compared to its real-world precious metal counterparts such as gold and silver, which see daily volatility closer to 1% and 2%, according to the research.

The most appropriate stock comparison to Bitcoin in terms of volatility and market cap was the electric car manufacturer Tesla, the economist said. 

Ether, on the other hand, is more comparable to electric car manufacturer Lucid and pharmaceutical company Moderna, based on market cap and volatility.

Fracassi said this puts crypto assets in a very similar risk profile to traditional asset classes such as technology stocks:

“This suggests that the market expects crypto assets to become more and more intertwined with the rest of the financial system, and thus to be exposed to the same macro-economic forces that move the world economy.”

Fracassi added that roughly two-thirds of the recent decline in crypto prices are the result of macro factors such as inflation and a looming recession. One-third of the crypto decline can be attributed to a plain-old weakening outlook “solely” for cryptocurrencies.

Related: The crypto industry needs a crypto capital market structure

Crypto pundits have viewed the fact that the crypto crash was being led by macro factors as a positive sign for the industry.

Erik Voorhees, co-founder of Coinapult and CEO and founder of ShapeShift, wrote on Twitter last week that the current crash was the least worrisome to him, as it was the first crypto crash that was clearly “the result of macro factors outside of crypto.”

Alliance DAO core contributor Qiao Wang made similar comments on his Twitter, explaining that previous cycles were caused by “endogenous” factors such as the fall of Mt. Gox in 2014 and the bursting of the initial coin offering (ICO) bubble in 2018.

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