As the entire cryptocurrency market shows a recovery, one crypto expert has provided insights into the relationship between altcoins and Bitcointhe largest cryptocurrency asset, confirming how closely the recent performance of altcoins is tied to the current movement in Bitcoin.
This relationship becomes especially evident when there is a significant amount of volatility, as changes in BTC can have a ripple effect on the cryptocurrency market as a whole, demonstrating the dominance of digital assets in the industry.
Altcoins move in line with Bitcoin’s performance
In the ever-evolving world of cryptocurrencies, understanding token correlation is crucial for investors to navigate the volatile digital asset market. Because of this, Joao Widson, a cryptocurrency investor and researcher, Shedding light About the relationship between altcoins and Bitcoin.
The expert stresses the extent to which Bitcoin price Trends continue to influence the behavior of the altcoin market in general, although coins can sometimes exhibit independent price movements.
According to Wedson, there is a positive relationship between altcoins and BTC at the moment, indicating that these tokens are following the BTC price trend over the past few days. With altcoins moving in tandem with BTC, investors seem to be confident in the entire crypto market, leading to a general alignment in the market.
At present, Wedson highlighted that the altcoins that are currently showing the highest correlation to BTC price action include BNT, AXS, Chainlink (LINK), Algorand (ALGO), and Cardano (ADA), meaning they are closely following the changes in its price trend.
Meanwhile, other altcoins such as DASH, CRV, DYDX, BNB, and ALICE showed lower correlation levels, indicating that they are gradually becoming less dependent on Bitcoin.
However, Widson stressed that all of these Alternative currenciesDespite the individual differences between them, they still generally show a positive correlation, indicating the impact of BTC’s performance on the tokens.
Although the correlation between altcoins and BTC is currently positive, Wedson stressed the importance of investors making clear observations of the trend before taking any action, given the volatile nature of the trend. Cryptocurrency Market.
According to the expert, this behavior supports the theory that the general market is now moving in parallel with Bitcoin, which may lead to stability in the short term. However, it also requires continuous monitoring to detect any potential irregularities that could pose risks in the future.
Impact on the general market
Historically, when the average correlation of altcoins tends to turn negative, it is considered a danger sign, Wedson noted. Bitcoin and the market in general, which means that investors are expected to be very cautious during this period. Negative alignment usually occurs when altcoins are Much better performance than Bitcoinoften leading to a decrease in the value of BTC.
He also drew attention to several occasions in January, June and July of this year when altcoins outperformed Bitcoin. However, it wasn’t long before the market saw a “downturn,” especially in Bitcoin, underscoring the importance of watching these signals.
Featured image from Unsplash, chart from Tradingview.com