Binance report: Bitcoin dominance weakens BTC-altcoin correlations in Q2

Bitcoin’s became less correlated with other cryptocurrencies in Q2 2019, according to a Binance Research report.

According to the 2019 Q2 Crypto-Correlations Review, the second quarter marked the third best quarter the crypto industry has seen since 2014 and the highest growth since 2017. During this period, Bitcoin’s price increased by 300%, pushing its market dominance to above 60% and marking new highs for the year. This played a part in the significant decrease in its correlation with other cryptoassets.

“Correlations declined between Bitcoin and altcoins, with a decrease in average correlation of -0.11. The overall market capitalisation rose by 139%, whereas altcoin aggregated market capitalisation (including stablecoins) increased by ‘just’ 71% over the same period,” according to Binance Research.

Cryptoassets with more important idiosyncratic factors (e.g. major news and events) exhibited relatively low average correlations with other cryptos. These include Binance Coin, which moved to its own native blockchain and benefited from various news and updates that increased market interest; Chainlink, which revealed collaborations with Google as well as Matic Network, and Bitcoin SV, which displayed unusual price fluctuations and was delisted from some major exchanges.

Other key findings

The decrease in crypto correlations was also seen in some Proof-Of-Work cryptoassets such as Bitcoin Cash, Dogecoin, Ethereum Classic, Bitcoin Gold, and more, which exhibited lower average correlations than before.

Privacy coins display higher than average correlations with eachother.

Similar functions (e.g. Ripple with Stellar Lumens) seem to lead to higher than average correlations between two cryptoassets.

Read the full report here.

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