First mover, Bitcoin, is rightfully enjoying all the advantages as every other cryptocurrency is pegged to it, giving it a wild sway over altcoins. Since Bitcoin is the most traded cryptocurrency (excluding Tether) and is one of the dominant trading pairs on most exchanges, the effect of any sudden movement in BTC can be seen in altcoins. To put it simply, there is a strong correlation between altcoins and BTC.
According to Unfolded’s correlation Matrix, correlation between Bitcoin and the top 10 cryptocurrencies is not only positive but very high. Ethereum [ETH] is 85% correlated to Bitcoin while Bitcoin Cash [BCH] is 89.42%; the same trend can be seen for Litecoin, EOS, Binance Coin [BNB] and Bitcoin SV [BSV]. However, what’s interesting is that the correlation for XRP, the third-largest cryptocurrency and it’s so-called competitor, XLM is very less.
This means that these coins’ price moves independently to that of Bitcoin. Also, looking at Spearman correlation charts for XRP And XLM gives a much clearer idea about the decreasing correlation over the past month.
Correlation among cryptocurrencies paints one narrative while correlation with traditional assets paints another. There is this dogma about Bitcoin set by the so-called OGs of Bitcoin which believe that Bitcoin is supposed to be a hedge against traditional assets. However, that is a bit of stretch as of now and it might change in the future and BTC could very well become a safe haven asset.