Cryptocurrencies tend to move up and down in value, and have a negative correlation with the dollar.
Volatility in trading bitcoin and other digital coins continues as the cryptocurrency market ramps again, surging past the $6,000 level for the most widely purchased virtual currency.
Bitcoin remains highly correlated with the other digital coins, known aptly as the altcoins. When bitcoin rises, these altcoins, such as ethereum, ripple, bitcoin cash, litecoin and monero, move in tandem. Bitcoin has a positive correlation with the other coins, ranging from 0.74 to 0.95, nearly reaching a score of 1 that would give it a perfect correlation, says Mati Greenspan, a senior market analyst at eToro, a Tel Aviv-based social investment network.
“The correlations between crypto to crypto are extremely positive,” he says. “This is due to the highly speculative nature of this high-risk market.”
Since December, bitcoin, which is lightly regulated, has given investors a show, hitting a high of $20,000 before dipping to $8,500 by mid-March and ultimately reaching lows in the $6,000 range, wiping out billions of dollars in market cap because of extreme volatility, hacking and orders from regulators. Large losses are not unusual for bitcoin and other digital currencies.
While the losses in ethereum, the second-largest digital currency, are sometimes are larger than bitcoin and the dips in ripple are fewer compared to bitcoin, those were only coincidences as the reverse has occurred, says Greenspan.
“This may have been the dynamic over the short term but is not a rule of any kind,” he says.
Source/More: As Bitcoin Goes, So Do Other Cryptocurrencies | Cryptocurrency | US News
