Which altcoins are negatively correlated with bitcoin?

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11 August

The value of most coins depends on the value of bitcoin. This phenomenon is called correlation. It is very important in the formation of a portfolio, and we will talk about this in more detail. The coefficients can vary from -1 to +1: 

  1. +1 indicates that the coins move synchronously and react in the same way to the same factors.
  2. 0 indicates no correlation.
  3. -1 indicates that currency prices are moving in opposite directions.

Almost all digital assets have a positive dependence. But the connection between individual coins is different: many repeat the movements of bitcoin, others are less dependent on the first cryptocurrency.

The correlation with LTC is also high (+75%). XRP is less dependent on the behavior of the flagship (+66%). A positive correlation is especially pronounced when the BTC rate falls. Correction of the price of the base cryptocurrency by 10-15% causes a collapse of altcoins by 20-30%. The relationship with the strengthening of the position of bitcoin is less pronounced.

What cryptocurrencies do not depend on bitcoin? Look at the correlation table from the Macroaxis website. In it, you can see what correlation Bitcoin has with altcoins. In it, we can see that cryptocurrencies that do not depend on bitcoin (have a negative correlation with it) are Helium, Trust Wallet Token, Flamingo, Bella Protocol, Numeraire, Litentry and Storj. But more often than not, the larger the capitalization of an altcoin, the higher its correlation with the main cryptocurrency.

Reasons for the positive correlation of cryptocurrencies

Until 2018, analysts often talked about the multidirectional price movements of bitcoin and altcoins. But after a deep fall in the market, the situation changed. BTC started growing again, proving its resilience and confirming its leadership status. Altcoins follow the flagship, but do not literally repeat its movement. The fall in prices for alternative coins is deeper, and the rise is lower. Therefore, during sharp collapses, their value recovers more slowly. Digital gold growth often outpaces the rest of the market.

Experts name several reasons for this relationship between altcoins and bitcoin:

  1. Digital currencies react to all external factors in the same way, but with varying degrees of perception.
  2. Major players see BTC as a defensive asset during periods of turmoil in traditional markets.
  3. Many investors perceive cryptocoins as a single array of digital assets.

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