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Cryptocurrencies have traded like risk assets because of stimulus from governments and central banks, but tighter Federal Reserve policy means that the “liquidity-driven crypto momentum trade” has reversed, Morgan Stanley said in a note published Tuesday.

The growth in bitcoin's market capitalization has generally tracked the growth in the global M2 money supply, the report said, noting that the crypto market capitalization grew 10-fold from the start of 2020 amid central bank easing. The crypto market cap has fallen from a peak of $2.92 trillion in November last year to under $2 trillion.

Despite the recent fall in cryptocurrency prices, the creation of digital assets is still high, with more than 100 created in the past week or so, mainly on decentralized exchanges, analysts from the bank said. Decentralized finance (DeFi) user growth has tracked ether prices, it noted.

DeFi is an umbrella term used for lending, trading and other financial activities carried out on a blockchain, without the use of traditional intermediaries.

Morgan Stanley observed that trading activity has been weak during the “crypto bear market”, with exchange trading volumes of around $750 billion in March, half that of the peak last November. Trading volumes have generally tracked the bitcoin price, it added.

Bitcoin has had a high correlation with equities since early 2020, and has had almost zero correlation with gold recently, the report said, noting that the cryptocurrency has been more correlated with the media and entertainment stocks in the U.S., as both are possibly driven by similar factors.

Read more: Morgan Stanely Sees DeFi Remaining ‘Fairly Small’ as Growth to Slow