Market correlation: how cryptocurrencies move together
The world of cryptocurrencies has experienced a remarkable increase in popularity and adoption over the past decade. From Bitcoin to Ethereum and Litecoin in Monero, cryptocurrency has its unique characteristics, use cases and price movements. However, despite their differences, many cryptocurrencies have formed correlations between them, influencing everyone’s prices and behavior. Cryptocurrencies and explore how they move together.
** What is market correlation?
Market correlation refers to the relationship between prices of different assets or investments in a given market. (For example. Market correlation can be used to identify potential investment opportunities and distance by analyzing the relationships between various assets.
How cryptocurrencies move together
Cryptocurrencies have formed a complex network of correlations with each other. Here are some examples:
- Bitcoin (BTC) and Ethereum (ETH) : Bitcoin was considered the cryptocurrency “lender” “
- Bitcoin Cash (BCH) and Litecoin (LTC)
: They
- Monero (XMR) and ZCASH (ZEC) : When a cryptocurrency is announced, the other tends to follow, and vice versa.
- Altcoins : The wider market for cryptocurrencies has also experienced correlations between various altcoins. Cryptocurrencies (DOGE) or rod (XVG), while altcoins based on Ethereum like EOS and Binance Smart Chain (BSC) tend to move in tandem with each other.
** Why are cryptocurrencies correlated?
Correlative:
1 and 1 conversely, when the supply is high and demand is low, prices tend to drop.
- Volatility :
. When investors are optimistic, they tend to buy more cryptocurrencies, which causes higher prices.
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Implications for investors
Understanding market correlation between cryptocurrencies is essential for investors who wish to make informed decisions on their portfolios:
- Diversification : Invest
- Risk management : The prices of cryptocurrencies are known to be highlighted,
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