Correlation between Bitcoin and Ethereum reaches its lowest point since 2021.
Kaiko Research has noted a significant change in the correlation between Bitcoin and Ethereum. For the first time since 2021, the correlation between the two cryptocurrencies has dropped below its average of 0.71. This shift comes at a time when both BTC and ETH have experienced a decline in prices, with a drop of nearly 6% over the past week. Currently, Bitcoin is priced at $40,991, while Ethereum is at $2,463.
Traditionally, Bitcoin and Ethereum have exhibited a strong correlation in their market movements. However, the recent divergence raises questions about the future trajectory of Ethereum. This is especially notable considering the surge in trade volume for Ethereum without corresponding signs of a rally in the derivatives market. This contrasts with the Bitcoin market, which has seen significant growth in anticipation of ETF approvals.
Looking back at Bitcoin’s history, it is observed that it has delivered an impressive 100% return over the past year, overshadowing Ethereum’s gains of 60%. The approval of spot Bitcoin ETFs marked a pivotal moment, where Bitcoin prices dipped while Ethereum experienced a rally. Speculation grew that Ethereum could be the next cryptocurrency to receive ETF approval.
Previously, investors had focused on “ETH beta” tokens, such as Optimism (OP) and Arbitrum (ARB), which are closely tied to Ethereum but with higher volatility. However, after the approval of Bitcoin ETFs, this trend reversed, with beta tokens experiencing a decline while Ethereum showed relative resilience by registering the smallest decline.
The current situation highlights the evolving dynamics between Bitcoin and Ethereum. While Bitcoin’s ETF journey has strengthened its market presence, Ethereum’s path appears less clear. Its reduced correlation with Bitcoin suggests the potential for independent market behavior. However, the lack of traditional rally indicators in derivatives markets and the shift away from ETH beta tokens after Bitcoin ETF approval inject uncertainty into Ethereum’s future.
Read more: Traders liquidate over $250m amid Bitcoin price decline. Follow Us on Google News.
