Digital assets will largely decouple from traditional equity markets in 2023, believes Arca chief investment officer Jeff Dorman.
Discussing his outlook for 2023 in a recent interview with Cointelegraph, Dorman argued that as the global economy enters a recession this year, equities will be negatively affected while some cryptocurrencies will perform well. The value of the latter, he explained, is determined not only by macroeconomic factors but also by their utility within their respective ecosystems, which would remain unaltered in a recession.
“You’re going to see a lot of stocks get punished under the weight of restructurings and under the weight of lower revenues and lower cash flows," said Dorman. “And you’re actually going to see a lot of tokens do really well.”
However, crypto’s decoupling process from equities may not involve Bitcoin (BTC), which Dorman believes will remain highly correlated to the stock markets given its high sensitivity to macro factors such as global liquidity and interest rates.
“Bitcoin has just become a 24/7 VIX. It's just a trading vehicle now for large funds who want to get in and out of risk on weekends and overnight trading hours,” Dorman stated.