LearnBonds.com

Ethereum Became The Most Correlated Crypto In The Ecosystem

Ethereum Became The Most Correlated Crypto In The Ecosystem
4 (80%) 4 vote[s]

Ethereum (ETH) became the most correlated cryptocurrency in the market during Q3. This is according to a recent report released by Binance Research a few hours ago. Bitcoin (BTC) and Ethereum registered a correlation coefficient of 0.81 over the third quarter of 2019.

The correlation coefficient is used to measure how strong the relationship between the two variables is – in this case, two cryptocurrencies. With this correlation, we can understand how digital currencies behave when the market surges or falls. If two coins are highly correlated, then they would perform and act similarly.

If these two cryptocurrencies are not correlated at all, they will behave randomly. If they are inversely related, that means that if one grows, the other would probably fall.

Ethereum Correlates The Most

The second-largest cryptocurrency registered the most significant correlation in the cryptocurrency market compared to other digital assets.

One of the things the report says is that programmable blockchains, including Ethereum, exhibited, on average, a higher correlation with each other than with non-programmable assets.

At the same time, Proof of Work (PoW) assets has also exhibited a more considerable correlation with each other. That includes Ethereum.

Nevertheless, it is worth pointing out that Ethereum is currently transitioning to Proof of Stake (PoS). It would be interesting to see whether this migration would impact Ether’s correlation with other assets.

The report explains that even though Ethereum displayed the most substantial correlation with most of the crypto assets in the market, it also had a surprisingly low association with Ethereum Classic (ETC).

Correlations of USD daily returns of thirty large-cap crypto assets between June 30th and September 30th 2019 (Source: Binance Research)

With this cryptocurrency, ETH registered a correlation coefficient of 0.69.

Finally, there is only one cryptocurrency that registered a higher correlation with Bitcoin than Ethereum. Decred (DRC) had a correlation of 0.82 compared to 0.81 of Ethereum.

The least correlated asset with Ethereum was Crypto.com coin (CRO) with a correlation coefficient of 0.2. The cryptocurrency with the most significant correlation with Ethereum during the third quarter of this year was Bitcoin Cash (BCH).

At the moment, Ethereum has a market capitalization of $20.14 billion and a price per coin of $186.

Views expressed are those of the writers only. Past performance is no guarantee of future results. Trading comes with severe risk. All content on our website is provided solely for informational purposes, and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security, product, service or investment. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate.
Avatar

Justinas Baltrusaitis

Justin is an editor, writer, and a downhill fan. He spent many years writing about finances, blockchain, and crypto-related news. He strives to serve the untold stories for the readers.

Write first comment

Reply

Your email address is not published.