The correlation between exchange tokens and Bitcoin

The correlation between exchange tokens and Bitcoin

By Jumble | Jumble | 17 Jun 2020


Introduction

In an earlier post the HODL results for 1-year and year-to-date for the Binance (BNB), OKEX (OKB), and Houbi (HT) exchange tokens are shown. The usual subsequent question is, “what is the correlation between the exchange tokens and Bitcoin (BTC)?".

As with all cryptocurrencies, there is a large amount of volatility in the price for all the exchange tokens. This post will show the correlation between BNB, OKEX, and HT and BTC since the large decrease in price that occurred on March 12th, 2020. Below is the percentage price increase from the market open on March 13th, 2020.

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The above historical prices are from https://messari.io/.

Correlation of BNB, OKB, and HT to BTC

Below is a chart for the same time period in the chart above.

573799d4ee34dc4fcf98c6d14842f41b8225f89e7e82aa9709cb20672965edfa.jpeg

Note: The price chart is from https://www.tradingview.com/. Each cryptocurrency operates independently, and there will always be a difference in reported prices. Thus, there is also a difference in the percentage change shown in the above table and chart.

The chart shows that there is a high correlation between all the exchange tokens and BTC. From time to time, the correlation for an exchange token and BTC is less strong. When this occurs, it is thought that the price change is a result of news related to the exchange that issued the token.

Conclusions

There are two advantages to trade or invest in an exchange token as an alternative to BTC.

  1. because you own an exchange token, you can save money on the services given by the exchange, such as a lower withdrawal fee, or a discount on exchange rate, etc.
  2. the price for an exchange token is much lower than the price for BTC.

But there is one disadvantage to to trade or invest in an exchange token as an alternative to BTC.

  1. The liquidity for BTC is very high, while the liquidity can be small. During a time period high volatility, it may not possible to do a trade for an exchange token.

 

Note 1: Prices from https://messari.io/

Note 2: Price chart for the correlations from https://www.tradingview.com/

Note 3: This comparison is for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice.


Jumble
Jumble

Technical and marketing content writer. And a cryptocurrency fanatic.


Jumble
Jumble

Thoughts about cryptocurrencies

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