Bitcoin’s Rolling Correlation With Ethereum Drops By 20% in Two Months: Kaiko Research

The post Bitcoin’s Rolling Correlation With Ethereum Drops By 20% in Two Months: Kaiko Research appeared first on Coinpedia Fintech News

The Bitcoin market has over the past decade enjoyed undisputed control over the altcoin market. Furthermore, Bitcoin enjoys the lion’s share of the total crypto market capitalization, which stood around 47.81 percent on Tuesday. However, Bitcoin’s influence over the altcoin market has been significantly challenged by Ethereum, which has held the second position in the past few years. 

Ethereum Decoupling from Bitcoin

Moreover, the Ethereum network lately records a higher daily average of transactions, over a million, compared to Bitcoin’s at half a million. Additionally, the successful transition from PoW to PoS through the Merge event and the Shanghai upgrade has significantly increased the rift between Bitcoin and Ethereum. 

Related: ​​Crypto Market Analysis: Top Predictions for Bitcoin, Ethereum, and XRP for the Coming Week! – Coinpedia Fintech News

“What we are seeing could be the beginning of a long-term regime change. As Ethereum has shifted from PoW to PoS, the economics of supply and demand underlying the 2 tokens will continue to diverge,” according to Pulkit Goyal, Vice President of trading at OrBit Markets, an institutional liquidity provider of options and structured derivatives in digital assets. “Bitcoin will cement its status as the “digital gold” or a blue-chip stock while Ether will be seen as a growth stock or an emerging market,” Goyal added.

According to a report conducted by Kaiko, Bitcoin’s rolling correlation with Ethereum has dropped from 96 percent to 77 percent since mid-March. Reportedly, this is the lowest level the rolling correlation between Bitcoin and Ether has been since November 2021.

From the chart above provided by Kaiko Data, it is evident the divergence between Bitcoin and Ethereum widened in April, after the Shapella upgrade. This is likely due to the fact that investors view Ethereum as a standalone market with different tokenomics and dynamics.