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Is Ethereum the One Actually Leading the Market Instead of Bitcoin?

2 mins
Updated by Gerelyn Terzo
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In Brief

  • The ETH/BTC price has had a positive correlation with the total crypto market cap for the past 173 days.
  • The consensus is that the BTC price is the one that leads the market, not Ethereum.
  • This does not mean that holding Ethereum is more profitable than holding BTC.
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Ethereum is the No. 2 ranked cryptocurrency based on its market capitalization. Therefore, the general consensus is that it leads the altcoin market. Once Ethereum goes up, altcoins usually follow suit.
In addition, it has often been assumed that when the market cap is going up, Bitcoin increases at a faster rate than altcoins, while when the market cap goes down, altcoins decrease at a faster rate. This would make Bitcoin the leader of the market. However, well-known trader @CryptoCapo presented another idea. He stated that the Ethereum price and the total cryptocurrency market capitalization are correlated positively. This means that as one moves upward the other will follow, and the same stands true for downward movement. This is an interesting claim, since as we stated above, the consensus is that the BTC price is the one that leads the market, rather than Ethereum. Below, we will compare the Ethereum price movement alongside the total cryptocurrency market cap in order to determine if it is the one actually leading the market.

Ethereum vs. Crypto Market Cap

The comparison is done using the Ethereum/BTC pair. Therefore, when we say Ethereum is increasing, it means that Ethereum is increasing at a faster rate than Bitcoin. The same remains true when we say that Ethereum is decreasing. In the image below, the periods in which ETH and the crypto market cap have a positive correlation are shown in green, while when the opposite is true the color is red.
Ethereum Price Movement
Ethereum Chart By Trading View
  • Jan. 1, 2019 – June 26 = Market cap up, ETH down
  • June 26 – Sept. 5 = Market cap down, ETH down
  • Sept. 5, – Nov. 5 = Market cap down, ETH up
  • Nov. 5, 2019 – Feb. 16, 2020 = Market cap up, ETH up
  • Feb. 16, – Now = Market cap down, ETH down.
Therefore, since the beginning of 2019, the current time period is the longest in which the two have been positively correlated. This occurrence began on Nov. 5, 2019 and has been going on for the past 131 days. This does not mean that holding Ethereum is more profitable than holding BTC. As we can see in the image above, when the market cap has gone down, the Ethereum price has decreased at a slower rate than Bitcoin. However, it would be more profitable to long Ethereum when the market cap is going up than to long BTC, which has been the consensus until now. It is yet to be determined whether this correlation will continue in the future. To conclude, if the current correlation between the total crypto market cap and Ethereum continues to hold, the price of Ethereum would be the one that dictates the direction of the market’s trend, rather than that of Bitcoin.
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Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Valdrin Tahiri
Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona School of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst. (I do not have a discord and will not contact you first there. Beware of scammers)
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