Ethereum and Bitcoin Correlation


Ethereum and Bitcoin are cryptocurrencies that can be traded on exchanges. They differ in their utility, but what might interest investors is the correlation between the two. In this article, we will investigate whether there is a relationship between BTC prices and ETH prices or not.


What is Bitcoin Correlation?


Bitcoin price has been very correlated with other cryptocurrencies, especially Ethereum. This is an expected result as Bitcoin will often have the leading role in the markets because it was the first cryptocurrency.


Ethereum and Bitcoin Correlation


Ethereum and Bitcoin correlation can be analyzed using different time frames. Looking at daily data, Ethereum follows Bitcoin very closely with a correlation of 0.71 for the 2016 year to date. Indeed, let's look back even further to 2012, when both cryptocurrencies were moving freely without cross dependencies. 


There is still some correlation present which increases over time because both currencies are traded mostly against USD. They will be highly correlated by default due to their dependency on USD value fluctuations.


Ethereum and Bitcoin have been highly correlated in recent years with small-time span variations because other crypto currencies are relatively new, so Ethereum should largely follow Bitcoin unless other factors intervene, such as loss or gains in market share, which will give it larger amplitude to deviate from its 'intended' path.