Crypto market back to high correlation as all indices follow Bitcoin closely
Data shows that the crypto market has become highly correlated again in the past week as all indices have closed behind Bitcoin.
All market cap weighted crypto indices have moved together recently
According to the latest weekly report from Arcane Research, the 30-day ETH-BTC correlation now has a value of 0.95.
To assess the performance of the different parts of the market as a whole, the coins are divided into the “crypto indices.” The criteria for including an asset in an index is to use the market value.
The “market value” here simply refers to a measure of the total value of a cryptocurrency’s entire circulating supply.
There are three main categories of indices: “upper case”, “middle case” and “lower case”. As their names already suggest, these indices provide a look at how the various sizes are doing right now.
Here’s a chart showing how each of these altcoin indices have performed against Bitcoin over the past month:
Looks like the small caps have performed the worst in recent days | Source: Arcane Research's Ahead of the Curve - November 22
As you can see in the graph above, the market capitalization weighted indices haven’t diverged too much over the past month, but especially over the past week they’ve been tracking each other very closely.
Both Bitcoin and mid caps are currently down exactly 18% over the past thirty days, while the large caps have also only marginally underperformed as the index currently returns 19%.
Small caps have taken a noticeably higher hit than the rest of the pack, as this index is 23% underwater during this time frame.
As can be seen from the data, assets across the crypto market have become quite correlated in recent days.
The report additionally notes that the 30-day rolling correlation between Bitcoin and Ethereum has now reached a value of 0.95. The correlation metric can have a maximum value of 1, which means that these two cryptos are now almost moving in tandem.
Since the year 2016, the BTC-ETH correlation has only been seen at such high levels for 3% of the total time.
Bitcoin price
At the time of writing, Bitcoin’s price is hovering around $16.4k, down 1% in the last week. Below is a chart showing the latest trend in the crypto value.
The price of the coin seems to have made some recovery from the plunge below $16k during the last couple of days | Source: BTCUSD on TradingView
Featured image from Art Rachen on Unsplash.com, charts from TradingView.com, Arcane Research
