In a report titled Decoupling, Messari senior research analyst Tom Dunleavy argues that the ethereum merger will likely be a major inflection point for investors’ economic outlook.
He noted that in the past, Bitcoin and Ethereum have had a strong positive correlation with the U.S. stock market. The correlation between the two cryptocurrencies and the Nasdaq and S&P 500 ranges from 40-50% over longer periods to around 90% over shorter periods.
In contrast, assets such as gold and U.S. government bonds have historically been negatively correlated with equities. However, at present, this negative correlation has become weaker and weaker. Gold and bonds both collapsed along with stocks during the inflation-driven market downturn in 2020. Based on this trend, Dunleavy believes that as inflation continues, gold and bonds will become less attractive.
This is the miracle that betting Ethereum in a PoS system will bring to the market. After the merger, ETH will become a quasi-government bond. Pledgers will invest funds in exchange for a return on a fixed schedule, such as the principal of a bond. This will also cement Bitcoin’s status as digital gold.