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Crypto Markets Present Excessive Correlation As Costs Stay Caught Sideways

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Data shows the crypto market has been extremely correlated recently as prices have been stuck in perpetual sideways movement.

Crypto Market Correlation: Altcoin Indexes And Bitcoin Register Similar Returns

As per the latest weekly report from Arcane Research, the crypto market has mostly been trading in tandem recently.

To easily assess how the different segments of the crypto sector are performing against each other, the market is divided into “altcoin indexes

These indexes are market cap weighted, meaning coins are put into them based on the worth of their total circulating supplies.

There are three major altcoin indexes: the “large caps,” the “mid caps,” and the “small caps.” As their names imply, each of these cover a different sized segment of the crypto market.

Now, here is a chart that shows how these altcoin indexes have performed against each other, as well as vs Bitcoin, during the past month:

Crypto Market: Altcoins Vs Bitcoin

The percentage returns in BTC and the indexes in the last 30 days | Source: Arcane Research's Ahead of the Curve - December 6

As you can see above, the cutoff for the graph starts right as the crash due to the crypto exchange FTX’s collapse took place.

The entire market rapidly went down together during it, but in the days following the crash the indexes again started moving a bit differently from each other.

They were still somewhat correlated during this period, but there was nonetheless some degree of freedom between them.

In the last week or so, however, the crypto market has become extremely correlated as Bitcoin and all the altcoin indexes have mimicked the same trend.

This has happened while the prices of most of the coins have attained a strict sideways movement. The report notes that the flat market recently is probably because of traders leaving in hordes after the FTX debacle, leading to very low trading volumes.

At present, the best performer in the market is the mid-cap index, having observed negative returns of 18% in the last month.

But since the market has been so correlated, the others are only minimally behind, with the small caps being the worst of the bunch with 22% in losses.

BTC Price

At the time of writing, Bitcoin’s price floats around $16.8k, down 1% in the last week. Over the past month, the crypto has lost 20% in value.

Below is a chart that shows the trend in the price of the coin over the last five days.

Bitcoin Crypto Price Chart

Looks like BTC has seen a drop during the last 24 hours | Source: BTCUSD on TradingView
Featured image from Art Rachen on Unsplash.com, charts from TradingView.com, Arcane Research

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