As the entire cryptocurrency market is demonstrating an upswing, one cryptocurrency expert has provided insight into the relationship between altcoins and Bitcointhe largest cryptocurrency asset, emphasizing how closely the recent performance of altcoins is connected to the current movement of BTC.
This relationship is especially clear when there is a lot of volatility, as changes in BTC can have a ripple effect on the cryptocurrency market as a whole, demonstrating the digital asset's dominance in the industry.
Altcoin movement aligns 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. That's why Joao Wedson, a cryptocurrency investor and researcher, has shed light on the correlation between altcoins and Bitcoin.
The expert underlines how much Bitcoin Price Trends continue to impact the overall behavior of the altcoin market, although coins may occasionally exhibit independent price movements.
According to Wedson, there is a positive effect correlation between altcoins and BTC at the moment, suggesting that these tokens are following the BTC price trend over the past few days. With altcoin moving in unison with BTC, it seems that investors have confidence in the entire cryptocurrency market, triggering an overall alignment in the market.
Currently, Wedson highlighted that the altcoins that now show the greatest relationship with BTC’s price movement include BNT, AXS, Chainlink (LINK), Algorand (ALGO), and Cardano (ADA), implying that they are closely following changes in their price trend.
Meanwhile, other major altcoins such as DASH, CRV, DYDX, BNB, and ALICE exhibit the lowest correlation levels, indicating that they are gradually becoming less dependent on Bitcoin.
However, Wedson stressed that all of these alternative currenciesDespite their individual variations, they still generally show a positive correlation, suggesting the impact of BTC performance on the tokens.
Although the correlation between altcoin and BTC is currently positive, Wedson has stressed the importance of investors making lucid observations of the trend before taking any action, given the volatile nature of the cryptocurrency market.
This behavior, according to the expert, supports the theory that the general market is now moving in unison with BTC, which could generate stability in the short term. However, it also requires constant observation to detect possible irregularities that may present risks in the future.
Impact on the overall market
Wedson noted that historically, when the average correlation of altcoins tends to turn negative, it is considered a danger signal. Bitcoin and the market in general, meaning investors are expected to be very cautious during this period. Typically, the negative alignment occurs when altcoins perform significantly better than Bitcoinwhich frequently leads to a decrease in the value of BTC.
He further highlighted several occasions in January, June, and July of this year when altcoins outperformed BTC. However, not long after, the market witnessed a “crash,” especially in Bitcoin, underscoring the importance of keeping an eye out for these signals.
Featured image from Unsplash, chart from Tradingview.com
