Top 10 Coins More Correlated Than Ever, but Decoupling From Gold

Published at: April 10, 2020

Black Thursday has triggered two new trends in Bitcoin’s relationship with other cryptocurrencies and gold.

Historically, cryptocurrencies have been highly correlated with one another, especially the top ones. The correlation between cryptocurrencies and gold has been traditionally weak.

Source: Kaiko

Two new trends emerge

Since Black Thursday, two new trends have emerged: the correlation between Bitcoin (BTC) and the other nine cryptocurrencies has reached unprecedented levels, while the correlation between Bitcoin and gold has turned negative. Interestingly, even the correlation between Bitcoin and the Tether (USDT) stablecoin has gained in strength.

Source: Coinmetrics

Furthermore, examining the latest ten-day period, we observe that Bitcoin’s negative correlation with gold has grown further in strength and has turned negative with NASDAQ and S&P 500.

Source: Kaiko

Looking ahead

The reasoning behind this increase in correlation between Bitcoin and other top currencies could be due to the general anxiety and uncertainty brought on by the pandemic and the economic crisis that followed. When it comes to the crypto market, there is additional uncertainty in view of the impending halving of the Bitcoin block reward and its effect on the Bitcoin price.

It seems likely that we will not see any major changes in the two new trends that emerged out of the Black Thursday until very close to the halving — or even past the halving — barring major unforeseeable events.

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