The bear market leads to higher cryptographic correlation
Recent analyzes show that cryptographic correlation levels they have significantly increased lately, with Bitcoin (BTC) as a leader.
Bitcoin controls the prices of other currencies
One of the biggest differences between cryptids and conventional stocks, shares and similar financial products lies in the fact that their prices are closely related. This makes almost all the scrambled influenced almost by the same factors.
A recent analysis of the data collected by Sifr has shown that up to 14 of its coins move in the same way as Bitcoin. This has been going on for over a year, and Bitcoin has also influenced the best encrypted, such as Ethereum (ETH), Ripple (XRP) and Litecoin (LTC), among others.
The biggest increase in cryptography prices came in a period between last August and this February. This is the period when the encryption prices skyrocket, led by Bitcoin, which has managed to reach previously unrecorded heights, up to $ 20,000 per coin. However, Bitcoin was not the only currency that acted in this way, and even if no other currency has managed to get closer to its value, it seems that everyone has jumped when Bitcoin said so.
This was also witnessed in the second half of January 2018, when the price of Bitcoin collapsed and the whole market followed. The result of this change was the total market capitalization from $ 800 billion to only $ 290 billion by February
However, the analysis of the data also showed that the correlation is not always the same and that is very higher when prices are going down, compared to when they are rising. This type of behavior was noted once again in the second half of July of this year, when BTC went from $ 6,300 to almost $ 8,400 in a few days. However, the price increase was interrupted by the SEC announcement that it will delay the decision of BTC's ETF, which again caused a sharp fall in prices.
The Bitcoin Effect
Bitcoin's nature and high profile make it the most attractive option for both new and experienced investors. As the first and most known and known cryptography, its influence on altcoin is enormous. The most recent example is this week after the currency has returned down to $ 6,300 after the SEC has confirmed that the ETF decision has been moved once again.
However, the real influence that BTC has over other encrypted ones can be seen when we look at what happened to the market capitalization after the announcement. Within the first 24 hours after the SEC announced another delay, the crypt of the encrypted market lost up to $ 34 billion. Obviously, Bitcoin was the epicenter and its domain was once again confirmed. This means that we have almost an official confirmation that any news influences BTC, it will surely affect the rest of the encrypted world.
However, some details of the analysis indicate that Bitcoin could also lose its grip. While a lot of large coins lost a significant part of their value when BTC went down, many others lost surprisingly lower figures. This could make these coins more attractive to investors, and those who are already part of their community will probably decide to stay still.
This change in perception could lead to other rising coins in a dominant position, such as Ethereum, for example, which suffered much lower losses. While founders and coin makers urge communities to consider all aspects of coins, their price remains the most popular factor in determining their overall value.
However, it's probably not a good thing considering their value depends on Bitcoin and probably other large currencies. Because the point of view changes in all the aspects that surround every single currency, and not just its price, volatility is expected to decrease and that correlation will also follow. At that point, BTC will no longer impose the behavior of the entire market and the encryption could reach higher levels of stability.