Bitcoin and Ethereum’s Price Correlation Takes a Dramatic Dive
The relationship between bitcoin and ether prices has experienced a significant change as their correlation dropped below 80% for the first time since November 2021.
Based on data from Kaiko, the rolling 30-day correlation between Bitcoin and ether reached approximately 78% this week. Correlation is a measure of how closely the prices of two assets move in relation to each other. A low correlation suggests that their prices move more frequently in different directions.
In simpler terms, the decreasing correlation indicates that the prices of BTC and ETH are no longer moving closer together as they did before.
A recent analysis conducted by Coinbase focused on the correlation between the returns of BTC and ETH.
The exchange observed a decline in correlation since the latter part of March, coinciding with Bitcoin’s outperformance of other cryptocurrencies during the period of turmoil in the U.S. banking sector and increased regulatory scrutiny on non-bitcoin digital currencies.
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Coinbase noted that the decline in correlation became more noticeable after the Shanghai fork (Shapella) and resembled a similar trend observed during the Merge in September 2022 when Ethereum transitioned to a proof-of-stake consensus mechanism.
From an investment standpoint, a diminishing correlation between two assets strengthens the argument for diversification by including both assets in an investment portfolio.
According to The Block’s Data Dashboard, bitcoin and ether prices increased by approximately 62% and 50%, respectively, in 2023.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
