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Blockchain is a digital ledger that’s used for storing data on several servers across the world in a decentralized, trustless... More goes up, altcoins usually follow suit.is the No. 2 ranked cryptocurrency based on its market capitalization. Therefore, the general consensus is that it leads the altcoin market. Once
In addition, it has often been assumed that when the market cap is going up,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.
— il Capo Of Crypto (@CryptoCapo_) March 14, 2020
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.
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.
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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