Bitcoin to altcoins Correlation Analysis (Attempt)
Updated
There was this question I read in a blog or page:
How come altcoins follow bitcoin especially when they go down?
I believe that this is not exactly true so I pulled this graph if it makes any sense. But I found some interesting information as always when we talk about correlation within a market (crypto-market).
We see that end of 2017, bitcoin (and bitcoin token CXP) was leading the charge to the upside dragging almost every altcoins with it. But when it came to an halt on 17/12/2017, interestingly all altcoins took an incredible advantage into January 2018! So while BTC was plummeting, we can see that bitcoins were offloaded in fiat currency but also in other altcoins as bitcoin and altcoins were totally de-corrolated after 17/12/2017. It is only on 17/01/2018 that those markets realigned again and continued to sink until 06/02/2018.
Then, bitcoin was resiting the downside pressure by holding its 06/02/20187 low while most altcoins were already breaking below till 18/03/2018 where we clearly see a realignment of all crypto-currencies. And since then looking at BTC crosses with altcoins, I can see few altcoins outperforming BTC.
When bitcoin goes down, do altcoins perform so bad? Not so sure. When bitcoin gets better, altcoins underperform (after the 17/12/2017). Now what we saw from 17/01/2018 to 02/06/2018 is that the all crypto market was beaten and were offloading to fiat currency again.
So, this is what we see in other markets. Primary correlation is that cryptocurrencies all went up and down but looking into detail, we clearly see the role of bitcoin for altcoins:
So, it would mean that bitcoin is the reference for fiat currency (I buy Bitcoin with fiat) and altcoins are referring to BTC, so bitcoin becomes the reference for the altcoins.
And this realignment happened only few times 17/01/2018 and 06/02/2018 and now.
What does that tell us?
- Until 17/12/2017 cryptocurrencies followed the path of bitcoin and bitcoin tokens with fiat going into this market.
- After 17/12/2017, bitcoin offloaded in fiat AND other altcoins.
Gradually in time, altcoins start to offload in fiat all together
- after 17/01/2018, the all cryptocurrency market suffers and offload in fiat
- after 06/02/2018, bitcoin found a bottom and fiat started to pour again into bitcoin and altcoins
- after mid Februay, bitcoin would be fueled by fiat and other altcoins finding refuge into bitcoin (still seen as reference)
- after 18/03/2018, bitcoin recovers but altcoins outperforms. fiat currency fueling the market and also altcoins regaining credit.
So, to me, from this chart, I understand that bitcoin is the entry for fiat into the crypto-market and for those converted to the technology and believers, bitcoin is the crypto refuge for altcoins.
So, I am not sure that bitcoin will disappear altogether, but in future, it will lose its reference as it will be easy to access the other markets.
What do you think?
How come altcoins follow bitcoin especially when they go down?
I believe that this is not exactly true so I pulled this graph if it makes any sense. But I found some interesting information as always when we talk about correlation within a market (crypto-market).
We see that end of 2017, bitcoin (and bitcoin token CXP) was leading the charge to the upside dragging almost every altcoins with it. But when it came to an halt on 17/12/2017, interestingly all altcoins took an incredible advantage into January 2018! So while BTC was plummeting, we can see that bitcoins were offloaded in fiat currency but also in other altcoins as bitcoin and altcoins were totally de-corrolated after 17/12/2017. It is only on 17/01/2018 that those markets realigned again and continued to sink until 06/02/2018.
Then, bitcoin was resiting the downside pressure by holding its 06/02/20187 low while most altcoins were already breaking below till 18/03/2018 where we clearly see a realignment of all crypto-currencies. And since then looking at BTC crosses with altcoins, I can see few altcoins outperforming BTC.
When bitcoin goes down, do altcoins perform so bad? Not so sure. When bitcoin gets better, altcoins underperform (after the 17/12/2017). Now what we saw from 17/01/2018 to 02/06/2018 is that the all crypto market was beaten and were offloading to fiat currency again.
So, this is what we see in other markets. Primary correlation is that cryptocurrencies all went up and down but looking into detail, we clearly see the role of bitcoin for altcoins:
So, it would mean that bitcoin is the reference for fiat currency (I buy Bitcoin with fiat) and altcoins are referring to BTC, so bitcoin becomes the reference for the altcoins.
And this realignment happened only few times 17/01/2018 and 06/02/2018 and now.
What does that tell us?
- Until 17/12/2017 cryptocurrencies followed the path of bitcoin and bitcoin tokens with fiat going into this market.
- After 17/12/2017, bitcoin offloaded in fiat AND other altcoins.
Gradually in time, altcoins start to offload in fiat all together
- after 17/01/2018, the all cryptocurrency market suffers and offload in fiat
- after 06/02/2018, bitcoin found a bottom and fiat started to pour again into bitcoin and altcoins
- after mid Februay, bitcoin would be fueled by fiat and other altcoins finding refuge into bitcoin (still seen as reference)
- after 18/03/2018, bitcoin recovers but altcoins outperforms. fiat currency fueling the market and also altcoins regaining credit.
So, to me, from this chart, I understand that bitcoin is the entry for fiat into the crypto-market and for those converted to the technology and believers, bitcoin is the crypto refuge for altcoins.
So, I am not sure that bitcoin will disappear altogether, but in future, it will lose its reference as it will be easy to access the other markets.
What do you think?
Note
Just to follow up on this.market proved me wrong on direction (we definitely do not go up) but still can see that 18/03/2018 is key point.
All crypto are now aligned reminding me of 17/01/2018 milestone.
On patreon, I will share links to other website where correlation and sentiment are shown. Team working on that!
Note
Was checking this idea again. was wrong with timing. and altcoins outperforming btc25/03/2018 altcoin going higher while btc was trading lower
10/04/2018 all markets aligned to the upside
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