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Bitcoin (BTC) and Ether (ETH) price correlation has fallen below 80% for the first time since November 2021, new data from cryptographer Kaiko shows.
According to Kaiko’s data, the correlation between the two largest digital assets dropped to around 78% last week, while the correlation between BTC and ETH was the lowest in 18 months.
Low price correlation between two assets means that the price of the asset moves in different directions more often than before.
Conversely, high correlation means that prices often move in the same direction.
In short, Kaiko’s latest data shows that BTC and ETH prices are not as closely linked as they used to be.
The discovery was shared by Kaiko on Twitter last Friday.
The drop in correlation is worrisome to traders, especially algorithmic traders who use certain hedging strategies between two assets.
Trend may continue until more ETH is released
Back in April, Coinbase analysts David Zuong and Brian Kubelis said in the market: update The correlation between BTC and ETH has been trending downward for some time.
“The performance between these two digital assets maintained a fairly stable high correlation through 2022-2023, except for the period immediately following the merger,” analysts wrote at the time.
They added that there is reason to believe that this trend will continue until more staked ETH tokens are released.
“We believe the current period of decline could continue until the first phase of ETH withdrawals,” they wrote.
ETH/BTC price remains unchanged
In particular, the lower correlation between BTC and ETH means that the ETH/BTC trading pair is more volatile than before.
And while that’s certainly true, what’s interesting is that the price of ETH/BTC was at about the same level 18 months ago, the last time the correlation was at this level, and today, i.e. about 0.066 BTC per ETH. to pay attention to what happened.
