- Market movement among the top 10 cryptocurrencies by market cap reaches a six-month high as BTC price stalled at $8,200 USD.
- The realized correlation index between the top 10 coins stands at 82.8% – the highest in the past 6 months.
- A number of factors have contributed to this positive correlation among the major altcoins during the period including BTC’s dominance in trading volume and value and ETH/BTC correlation.
In the past six months, the price of BTC and other major altcoins swung strongly as Q1 and Q2 gains were quickly wiped out in Q3’s bearish momentum that saw BTC’s price drop to current $8,200 support levels. This represents a whopping 30% dip in BTC’s price while large cap altcoins saw drops of between 35%-50% during the quarterly period.
Top 10 Cryptocurrencies Realized Correlation at 6 Month High
According to data on Skew Markets, the correlation index between the top 10 cryptocurrencies is at a six month high at 82.8%. In a tweet explaining the high correlation in price movement across the 10 largest cryptos, the data and analytics firm wrote,
1mth average pairwise correlation of daily returns within the Top10 cryptos reaches a 6mths+ high. It's getting more and more difficult to extract alpha through 'crypto picking'! pic.twitter.com/qy8Bb546av
— skew (@skew_markets) October 22, 2019
The high correlation is attributed to a number of factors including the high correlation between the two largest cryptos – BTC and ETH – and the Bitcoin Cash (BCH) / Bitcoin SV (BSV) heroics in the past few days.
BTC’s Huge Influence on Large Cap Coins Market
Bitcoin’s burgeoning dominance (both in market capitalization and trading) at the start of Q2 and through Q3 temporarily hit highs above 70% in market dominance. This influence is further amplified by being the coin with the most trading pairs with the large cap coins. In essence, in Q3 Binance announced trade volume of BTC pairs to stable coins (Tether accumulating 95% of these trades) account for 45% of the total trades on the exchange.
Despite BTC’s dominance dropping in the third and fourth quarter to around 66%, the pioneer cryptocurrency’s influence on the trading volume of the large cap coins remains clear on exchanges –especially those without fiat-to-crypto trading.
BTC/ETH Correlation at its Highest Point Since March
The correlation coefficient increases as the crypto assets pairs become larger (see Binance Q3 report). For instance, BTC/ETH correlation coefficient stands at 0.9288, with both cryptocurrencies experiencing double digit gains over the past six months.
The 1-month realized correlation between the two cryptocurrencies is at its highest point since March this year, at the start of the bullish momentum in the cryptocurrency market.