The Rise of Ether: A 2019 Analysis
In an explosive year for cryptocurrencies, Ether (ETH) emerged as the cornerstone of correlation across the crypto market. According to a report by Binance’s research team, ETH flaunted an impressive average correlation coefficient of 0.69 throughout 2019. Think of it as the popular kid at school—everyone wants to hang out with it!
Breaking Down the Correlation Coefficients
So, how did ETH get here? A closer look reveals its correlation coefficient started strong at 0.69 in the first quarter and peaked at 0.72 by Q4. A quick shout-out to Q2 and Q3, which were a bit like the middle child of the family—solid but a little overshadowed at 0.65 and 0.74 respectively.
Quarterly Average Correlation Breakdown
- Q1: 0.69
- Q2: 0.65
- Q3: 0.74
- Q4: 0.72
It’s clear that Ether found its groove towards the latter half of the year, becoming an undisputed champion of correlation.
What Drives These Correlations?
The study also noted that younger cryptocurrencies or those built on programmable blockchains like Ethereum, NEO, and EOS showed significantly higher correlations among themselves compared to their non-programmable cousins. It’s like a family reunion—programming languages unite!
Other High Performers
But let’s not forget that Ether wasn’t the only popular kid in class. Other assets like Cardano (ADA), EOS, Litecoin (LTC), and Binance Coin (BNB) also exhibited high correlation scores. Investors might want to keep their eyes peeled on these tokens too!
Correlation in Recession: The Low Performers
Amidst the high-flyers, there were also those who trod lightly. Cosmos (ATOM) recorded the lowest correlation in the market at just 0.31, followed closely by Chainlink (LINK) at 0.32, and Tezos (XTZ) at 0.40. They seem to play by their own rules.
The Binance Effect: A Market Phenomenon
Oh, and let’s chat about the ‘Binance Effect.’ The researchers pointed out that cryptocurrencies listed on Binance displayed higher correlation coefficients than their off-exchange buddies. If only all marketplaces were as enticing! They also claimed Binance Coin was the top dog for returns among the top ten assets. Consider that a mic drop moment!
Bitcoin and Traditional Markets: A Contrasting Tale
While Ether and its friends were strutting their stuff, Bitcoin (BTC) was busy redefining its relationship with traditional assets, particularly gold. New findings suggest that Bitcoin isn’t as tightly linked with gold as some assume. In fact, it appears BTC has an inverse relationship with the stock market—a trend that left many scratching their heads.
As the data from late 2019 indicated, correlations among crypto assets are worth exploring, especially as the market continues to evolve.
