Uniswap Labs Report: The Rise in Cryptocurrency Asset Prices Since 2023 is Unrelated to the Stock Market

ChainCatcher news, recently, researchers from Uniswap Labs, Copenhagen Business School, and Circle published a paper titled "Research on the Driving Factors of Cryptocurrency Prices." The article uses a structural vector autoregression model to study the factors influencing cryptocurrency returns.

The model identifies the impact of monetary policy and risk sentiment on cryptocurrency prices by using the co-movement of asset prices in conventional markets. Specifically, the researchers decompose daily Bitcoin returns into three factors reflecting conventional risk premium, monetary policy, and cryptocurrency-specific shocks. By utilizing the co-movement of Bitcoin and stablecoin market capitalizations, the specific shocks to cryptocurrencies are further decomposed into changes in crypto risk premium and levels of cryptocurrency adoption.

The analysis shows that cryptocurrency prices are significantly influenced by conventional risk and monetary policy factors. Notably, during the downturn of the cryptocurrency market in 2022, the factors related to tightening monetary policy accounted for more than two-thirds of the impact. In contrast, since 2023, the compression of crypto risk premium has been the main driver of cryptocurrency returns, independent of the active stock market backdrop.