The cryptocurrency market has continued to underperform other risk assets amid weakening demand, and is expected to stay highly correlated with equities, according to a research report by Citi. The bank noted that both bitcoin and ether (ETH) spot exchange-traded funds (ETFs) have seen outflows, indicating reduced investor appetite.

The report also said that network activity has been falling on Ethereum and stalling on the Bitcoin blockchain. Funding rates, which measure the difference between the price of perpetual futures and the spot price of digital assets, have also remained very low, suggesting decreased demand for bullish bets.

Looking forward, the bank said it expects the crypto market to remain highly correlated with equities amid the upcoming macro calendar, which kicks off with today's Nonfarm Payrolls report. Recent weakness in digital assets has also resulted in lower energy consumption by bitcoin (BTC) miners and "weaker production cost model outputs."

Source: https://www.coindesk.com/markets/2024/09/06/crypto-market-to-stay-highly-correlated-to-stocks-amid-macro-events-and-dwindling-network-activities-citi-says/

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