Cryptocurrency traders are hotly debating the potential correlation of prices with the traditional stock market. As the global economy suffers an unexpected and unprecedented hit, most asset classes have seen both a crash and a quick stabilization. While not directly tied to one another, both cryptocurrency and traditional stocks have seen a steady positive trend since the crash. This is in opposition to traditional beliefs that Bitcoin would be more likely to mirror the price trends of gold.
Less up for debate is the correlation between Bitcoin and Ethereum. In the wake of the coronavirus crash, the two top cryptocurrencies have moved in near lock-step. Volatility between the two reached a 4-month low, as many cryptocurrency charts began to mirror one another. The coronavirus pandemic eradicated many micro-level considerations, leaving the entire market to move on a macro level. Despite this, upcoming events may cause the two cryptocurrencies to decouple – Bitcoin’s pending halving event and a slow bleed of BTC dominance in the market.
Now more of an academic discussion, the “flippening” is a theoretical overtaking of Bitcoin in total market cap. In the throes of the 2017 rally, many enthusiasts watched with baited breath as ETH crept up towards a falling Bitcoin. The subsequent crash eradicated any near-term chance of a flippening, with Ethereum now trailing well behind Bitcoin.
The recent decrease in ETH-BTC price volatility suggests that Ethereum won’t be making another play for the number one spot in the near-term. However, it is also no longer in a position to be overtaken by the #3 coin, XRP. This occurred several times throughout 2018, sowing despondency in the Ethereum community. In fact, a staggering share of total cryptocurrency projects run on the Ethereum blockchain.
Volatility: Cryptocurrency Market Stabilizes
While global markets continue to suffer high volatility in the wake of the coronavirus pandemic, cryptocurrency’s rise is far steadier. Overall, most cryptocurrencies have recovered over 80% from the March 13th crash, with Bitcoin settling in the mid $7,000s. Investors should avoid becoming overly optimistic – the crisis is far from over, and more volatility is sure to come. Yet, the unexpected resilience of the cryptocurrency market is a good sign.
Despite low overall volatility between ETH and BTC, Ethereum has outperformed in the most recent upsurge. While all major cryptocurrencies increased over the start of the week, Ethereum saw as much as a 15% gain. As Ethereum had lagged slightly behind over the course of the recovery, this now puts it more in line with gains seen across the board.
Article By: Adam Stone