Bitcoin (BTC) & Ethereum (ETH): Unraveling the Minimal Correlation with Traditional Markets

  • Data reveals that Bitcoin and Ethereum have little correlation with traditional markets, suggesting that these cryptocurrencies are carving their own path.
  • Market intelligence platform IntoTheBlock’s data shows that the correlation between Bitcoin and Ethereum with traditional markets and commodities has been almost zero recently.
  • The low correlation coefficient with traditional markets suggests that cryptocurrencies have been operating more or less independently over the past month.

Recent data shows that Bitcoin and Ethereum have little correlation with traditional markets, suggesting that these cryptocurrencies are carving their own path.

Bitcoin & Ethereum: Masters of Their Own Destiny

According to data from market intelligence platform IntoTheBlock, the correlation between Bitcoin (BTC) and Ethereum (ETH) with traditional markets and commodities has been almost zero recently. The correlation coefficient, a metric that tracks how connected two quantities have been over a given period, suggests no relationship between these assets and traditional markets.

Understanding Correlation Coefficients

The correlation coefficient measures the relationship between two assets. A value greater than zero indicates a positive correlation, meaning the assets move in tandem. Conversely, a negative value suggests an inverse relationship, with one asset’s price moving opposite to the other. A correlation coefficient near zero suggests no relationship between the assets, indicating that they are independent.

Bitcoin & Ethereum’s Correlation with Traditional Assets

Recent data shows that the 30-day correlation between Bitcoin and Ethereum and traditional assets has been low. The most significant correlation is with the S&P 500, with coefficients of 0.4 for BTC and 0.49 for ETH. This data suggests that cryptocurrencies have been operating more or less independently over the past month.

Implications for Investors

Correlation is an important factor for investors looking to diversify their portfolios. Assets with high correlation offer poor diversification options as they either mimic similar performance or counteract each other. As Bitcoin and Ethereum lack solid correlation with traditional markets, they may be viable options for traditional investors looking to diversify their portfolios.

Bitcoin Price Update

Bitcoin’s price has retraced its earlier recovery over the last few days, returning to the $61,100 mark. This suggests a downward trend in the asset’s price over the last few days.

Conclusion

The low correlation of Bitcoin and Ethereum with traditional markets suggests that these cryptocurrencies are carving their own path, operating independently of traditional assets. This lack of correlation makes them attractive options for investors looking to diversify their portfolios. However, recent price trends suggest a downward trend for Bitcoin, highlighting the volatility and risk associated with cryptocurrency investments.

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