It is widely believed that price movements in Bitcoin are shadowed by every other asset in the crypto markets. This makes people believe that Bitcoin and Ethereum price movements are always moving in the same direction, but is that the case? Of course not.
Bitcoin and Ethereum correlation
Statistics tweeted by Su Zhu, the CEO of Three Arrows Capital, highlighted that Bitcoin and Ethereum price movements both have taken their own unique route and the expected closely aligned trends are non-existent. Looking at the monthly closes of BTC/USD and ETH/USD trading pairs it was observed that the price trends have diverged in 9 out of the last 36 months. This shows a negative correlation of 25 percent between their price movements.
This came as a shock to many people as Su Zhu noted, saying that it should be expected “given how often its occurred.” In those nine months, the divergence in trends was not minute but rather the price actions moved in totally different directions. The movements were not little as Zhu observed saying that months even saw Ethereum gaining over 30 percent while Bitcoin was down during the same time.
Zhu also observed that most of Ethereum’s gains have been in the time period between January and June each year. This has been true for Ethereum since the start of 2017. Meanwhile, the second half of the year sees gains in single digits or losses. However, Bitcoin gains were spread evenly across the months.
The pattern continues in 2020 as Ethereum has seen a bullish trend in January 2020, seeing gains of nearly 35 percent before pulling back.
Featured image by pixabay.