What is the correlation between Bitcoin and other crypto coins?

By DoRi | A guide to crypto | 24 Nov 2019

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When you trade in Bitcoin you want as much price information as possible. That's why it's interesting whether there are similarities between the price movement of the Bitcoin and other crypto coins. Cryptobeurs Binance has done research into this. Together with Coinmarketcap they kept track of price developments for a year. These are the striking results.

How does Binance's investigation work?

Binance's research is based on the 30 crypto coins with the largest market capitalisation. Stable coins are excluded. Next, the crypto coins were connected to each other in various ways. For example, classifications were made on the basis of market capital, on the basis of activities and on the basis of objectives.

Is there a correlation between Bitcoin and other crypto coins?

It turns out that this correlation does indeed exist. In the matrix below you can see the correlation between all cryptomunten that have been investigated. Note that the stronger the correlation, the darker the red the display. (text runs underneath the matrix).


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Correlation on Binance between Bitcoin and other crypto coins in the period 1 April 2018 - 31 March 2019.

In fact, there appear to be various correlations. We will list a number of them.

Correlation Bitcoin based on market cap

It appears that the prices of Bitcoin (BTC) and Ethereum (ETH) make the same movement very strongly. The Ripple (XRP) actually operates most autonomously and only has a strong correlation with Stellar (XLM).

It also appears that the correlation between coins quoted on Binance is increasing. In contrast to the previous year, a similar pattern seems to be observed for coins on Coinbase.

Correlation based on geographical origin

Another result of the analysis of the rates showed a correlation between the crypto coins of American origin on the one hand and Asian crypto coins on the other hand.

Correlation based on mining validation

Another remarkable conclusion is that the crypto coins that are mined on the basis of POS (Proof of Stake) show a much stronger mutual correlation than in comparison with coins that are mined on the basis of Proof of Work (POW). This also applies the other way round.

Correlation based on forks

Crypto coins that are a 'fork' of other crypto coins also appear to have a correlation. This is how a cluster of crypto coins was formed: Bitcoin Gold (BTG), Bitcoin Cash (BCH), Ethereum Classic (ETC) and Litecoin (LTC).

Autonomous coins

In addition to all the expected and special correlations that you can read throughout the study, there is also another conclusion to be drawn. There are 3 crypto coins that have little or no correlation with other coins. This can be seen in the Dogecoin(DOGE), Tezos(XTZ) and Ripple(XRP).

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