The correlation of Bitcoin with Ethereum falls to 0.67 What does it mean?
Bitcoin (BTC) is losing control over the cryptocurrency market for quite some time. The domain has seen a noticeable decline since the last week of March, down to 48.7% at the time of writing.
What could be the possible impact on the market in general?
In recent times, the price of Ethereum (ETH) has also been separated from the largest crypto asset in the world. According to the latest chart from Coin Metrics, the BTC-ETH correlation has sunk to 0.67.
As Ethereum broke away from Bitcoin, the altcoin soared to another all-time high near $ 3K as the week ended. Bitcoin, on the other hand, stabilized a bit above $ 57K and has been struggling to form strong support near $ 55K.
After getting used to being the most dominant cryptocurrency on the market, Bitcoin's correlation with the top ten tokens on the leaderboard has dropped below 0.3. It is important to note that it had a correlation of 0.9 and above with the major altcoins, almost a year ago.
Ethereum advances; Bitcoin is delayed
The top two cryptocurrencies had a profitable quarter. However, the two assets are very different when it comes to social sentiment, as well as the effects of the network from a technological point of view.
While Bitcoin's network effects haven't reached any milestones this quarter, the same cannot be said for Ethereum. The second-largest cryptoasset by market cap has fueled rallies for altcoins in the past, and boring price action or even a drop in Bitcoin's performance is generally expected to benefit the rally from the former.
Furthermore, the rise in decentralized financing (DeFi) projects, in addition to the growing spot volume of ETH trades, has further pushed its market capitalization to nearly $ 330 billion.
Ethereum-Bitcoin correlation and its impact
Here are two scenarios that are likely to play out due to the BTC-ETH correction being affected:
First, the current trend could briefly lead to a phase of an expansive bull market. This could mean that the cryptocurrency market, more specifically the altcoin cohort, could see further upside in the coming months.
Second, the reduction in correlations could potentially demonstrate a fundamental change in the industry. This could mean that other tokens on the market could finally get much-needed traction and attention from investors looking to diverge their portfolios beyond Bitcoin.
Ethereum has already demonstrated its value propositions to market players. Although controversial, Dogecoin (DOGE) has also seen widespread adoption, along with high-profile promotion and a large following.