Bitcoin is the undisputed leader and all the other crypto-assets closely follow its valuation. Ethereum [ETH] might be an independent asset with completely different reason d’être from that of Bitcoin, but at times, it also happens to mimic the latter’s price action. In the digital asset market, the king coin being the front runner and influencing other crypto-assets is considered a natural event.
In fact, for the past two years, the correlation has been extremely high hovering near 90%, according to Skew.
This was indicative of the fact that Ether had been the highest-correlated cryptocurrency to Bitcoin than for more than two years, with an average correlation coefficient of 0.9. But this trend appeared to be heading for a reversal. At the time of writing, the 6-month BTC-ETH correlation coefficient dropped to 0.85. According to the CoinMetrics chart attached below, the correlation coefficient dropped to a level that was last seen on the 14th of March this year.
The last couple of months have been nothing short of eventful for Ethereum. While Ethereum 2.0 launch continued to remain a moving target for the most part, but as revealed by Prysmatic Lab developer Raul Jordan, the much-anticipated launch was on track for November.
In addition to that, the DeFi explosion has managed to pump Ether’s price even higher as it was trading close to the coveted $400-level. And the mania is far from stooping as various centralized exchanges, such as Huobi and Binance, have hopped on the DeFi bandwagon and riding on its huge success.
The market sentiment
Despite several pullbacks along the way, the cryptocurrency industry has resumed an uptrend. Currently, the market was in a consolidation phase.
It is important to note that Ethereum’s correlation with the world’s largest cryptocurrency dropped significantly in 2017 just before the crypto-wide bullish cycle. During this time, Ethereum ‘s price surged to its all-time high value of around $1,440.
And as earlier reported by CoinGape, a “catastrophic dump” at this point is highly unlikely. Hence, should history repeat itself, this could essentially mark the return of a potential bull market across the board for the cryptocurrency industry.