Ethereum (ETH) is a popular cryptocurrency that has gained significant traction in the crypto industry, much like Bitcoin. Recently, the correlation between Ethereum and Bitcoin has hit a monthly high, a development that industry experts view as a positive sign for the BTC/ETH sector.
Year-to-date (YTD) data from CoinMarketCap shows that while Bitcoin has risen by 72.30%, Ethereum has only increased by 50.02%. Despite this disparity, the strong connection between the two assets has positively impacted Ethereum’s market performance.
Currently trading at $1,800.83, Ethereum has experienced one of its strongest quarters since hitting its All-Time High (ATH) of $4,891.70 in mid-November 2021, thanks in part to its link with Bitcoin.
Experts in the industry see the link between Ethereum and Bitcoin as a favorable indicator for the market as a whole, indicating a steadier and less volatile market. If the correlation between the two assets remains high, the market may attract more investors, leading to increased confidence in the sector.
The Relationship, And The Reason Behind The Correction
Industry experts are attributing the strong correlation between Ethereum and Bitcoin to several factors. Analysts suggest that the increasing acceptance of cryptocurrencies by institutional investors and businesses has contributed to this trend, with well-known companies such as Tesla and PayPal investing heavily in Bitcoin and driving its price up.
As Ethereum is widely regarded as the second most popular cryptocurrency after Bitcoin, it has benefited from this development. Additionally, analysts point to the growing adoption of Ethereum’s blockchain technology, which is used for a wide range of applications such as non-fungible tokens and decentralized finance. As more individuals use the Ethereum blockchain for these purposes, the price of Ethereum is likely to continue to rise.
Moreover, the growing adoption of stablecoins, which are cryptocurrencies that are anchored to the value of a fiat currency like the US dollar, has also played a role in the correlation between Ethereum and Bitcoin. Stablecoins are often used as a safe haven during periods of market volatility. As Ethereum’s blockchain is used by several stablecoins, this has contributed to the upward trend in Ethereum’s price.
The Correlation Pattern And The BTC, ETH Connection
From the information gathered, there has been a sudden trend in the correlation pattern of the Ethereum blockchain network. It is also observed that it has a connection with Bitcoin. Meanwhile, analytical data from IntoTheBlock says that the correlation in the price of ETH as it affects the BTC is presently at 0.98, which was also the biggest for that month.
The data also revealed that the protocol enabled by the smart contract is ready to end Q1 on a good note. At the time of writing, the ETH trades at $1,800.83, recording a marginal loss of 0.62%. Although it was stated that the current price is a fraction of the price of BTC, the weekly growth rate was one of the major points sighted by the correlation data.
While reacting to this development, Arthur Hayes: the BitMEX founder during one of his interviews said that the rising price of the BTC has started drawing attention from top cryptocurrency investors. He also predicted that the upcoming halving would further increase the price. He then added that all these events will have a relative impact on the price of ETH if good correlation activity persists.
On the other hand, other coins have also started reacting to this development. This has resulted in most of them performing extensively during the week. A typical example of this can be seen in the recent investigation that claimed that the 50 best-performing coins by market capitalization had had a good run throughout the week.
One of these coins is ApeCoin. Reports show it has performed so well during the week with a 14% price increase. Besides, the poorest performers on this top 50 list is the Klaytn, which recorded a 3% decrease in its price.