Some crypto tokens will perform better than stocks in 2023 as they become less sensitive to macroeconomic factors, according to CIO at Arca Jeff Dorman.
Digital assets will largely decouple from traditional equity markets in 2023, says Chief Investment Officer at Arca, Jeff Dorman.
Discussing his outlook for 2023 in a recent interview with Cointelegraph, Dorman argues that as the global economy enters a recession this year, equities will be negatively affected while some crypto tokens will perform well: the value of the latter, he explained, is determined not only by macroeconomic factors but also by their utility within the 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. And you're actually going to see a lot of tokens do really well”, Dorman explained.
Crypto's decoupling process from equities may not involve Bitcoin though, which according to Dorman, 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-seven 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 pointed out.