Crypto Asset Correlation Reveal Ethereum Has The Highest Coefficient Of Correlation

Ritika Sharma
Ritika Kumari Sharma is an Economics Honors graduate from the University of Calcutta. She is completely into finance and believes that cryptocurrencies are the future. She is an enthusiast learner about the cryptocurrency and blockchain technology.
  • Ethereum has always been one of the most valuable assets, with its correlation coefficient rising to 0.72 in the fourth quarter of 2019. 
  • Cosmos (ATOM) is the least relevant asset, in this sense. It has an average correlation coefficient of 0.31.
  • BNB will come out at the top with an increase of 128%. On the second spot is Bitcoin, with a rise of 87%.

For 2019, if we compare the top 10 cryptocurrencies with the highest median market capitalization, BNB will come out at the top with an increase of 128%. On the second spot is Bitcoin, with a rise of 87%.  

At the start of 2019, Bitcoin had a market share of 50%, and it managed to reach 68% mark and stabilized at that point. 

If we look at the crypto assets, they have a highly co-related link with each other. Ethereum is the asset with the maximum comprehensive correlation of 0.69 on an average, according to the 2019 data. Ethereum has always been one of the most valuable assets, with its correlation coefficient rising to 0.72 in the fourth quarter of 2019. 

Cosmos (ATOM) is the least relevant asset, in this sense. It has an average correlation coefficient of 0.31. The second and the third least relevant assets are Chainlink (LINK) and Tezos (XTZ), with a correlation coefficient of 0.32 and 0.40, respectively.

Crypto-assets Performance in 2019

A report published on the performance of big market crypto assets in 2019 found the following details

  • The price fluctuations of large crypto assets continued from the third quarter to the fourth one and were generally unfavorable. However, the top four crypto assets have continued to grow during the previous two quarters.
  • The analysis of correlation can give insight into the asset allocation. Generally, the coefficient of correlation is above 0.5, and the asset is considered strong. A correlation coefficient of close to 0 means the linearity is absent. 

In short, the median correlation among the main crypto assets declined during the Q4 of 2019. It reduced the annual median relationship below that of the third or, as a matter of fact, the fourth quarter. 

As evident from the earlier reports, idiosyncratic factors such as the programmable blockchain and the possibility of the “Binance Effect” affect the correlation of crypto assets in a significant manner. Being the most valuable in terms of median value, Ethereum is taken as the benchmark for other assets. A further study would reveal if the market fluctuation is going to affect the median correlation between crypto-assets.

We Recomaned

Top Rated Trading Platforms

Top Rated Cryptocurrency Exchange

Partners