Crypto Market Back To High Correlation As All Indexes Closely Follow Bitcoin

Crypto Market Back To High Correlation As All Indexes Closely Follow Bitcoin

  • Bitcoin
  • November 23, 2022
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Data shows the crypto market has become highly correlation again in the past week as all indexes have been closing following Bitcoin.

All Market Cap Weighted Crypto Indexes Have Been Moving Together Recently

According to the latest weekly report from Arcane Research, the 30-day ETH-BTC correlation now has a value of 0.95.

To assess the performance of the different portions of the market as a whole, the coins are divided into the “crypto indexes.” The criteria for putting any asset into an index is using its market cap.

The “market cap” here simply refers to a measure of the total worth of a cryptocurrency’s entire circulating supply.

There are three main categories of indexes: the “large caps,” the “mid caps,” and the “small caps.” As their names already imply, these indexes give a look at how the different sized coins are doing right now.

Here is a chart that shows how each of these altcoin indexes have performed against Bitcoin during the last month:

Bitcoin Vs Altcoins

Looks like the small caps have performed the worst in recent days | Source: Arcane Research's Ahead of the Curve - November 22

As you can see in the above graph, the market cap weighted indexes didn’t diverge too much during the past month, but in the last week especially they have been following each other very closely.

Both Bitcoin and the mid caps currently stand at exactly 18% in the red during the period of the last thirty days, while the large caps have also only minimally performed worse as the index’s returns are at 19% currently.

The small caps have taken a noticeably higher hit than the rest of the pack, as this index is 23% underwater in this timespan.

As is apparent from the data, assets across the crypto market have become pretty correlated in recent days.

The report additionally notes that the 30-day rolling correlation between Bitcoin and Ethereum has now hit a value of 0.95. The correlation metric can have a maximum value of 1, which means these two cryptos are now almost fully moving in tandem.

Since the year 2016, the BTC-ETH correlation has only been seen at such high levels for 3% of the total time.

Bitcoin Price

At the time of writing, Bitcoin’s price floats around $16.4k, down 1% in the last week. Below is a chart that shows the recent trend in the value of the crypto.

Bitcoin Price Chart

The price of the coin seems to have made some recovery from the plunge below $16k during the last couple of days | Source: BTCUSD on TradingView
Featured image from Art Rachen on, charts from, Arcane Research

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