Cas Abbe tweeted that BTC has strong correlations with ETH and SUI. Meanwhile, the tweet also says that BTC and ETH share the highest correlations. However, SUI has the least correlation with BTC.
But why is this correlation so important? Does it impact the trading strategies so badly?
Experts say that correlation matters a lot for multiple market phases. During bullish runs, a strong correlation with BTC can benefit a coin. Especially ETH. The investors can cash in something extra as the BTC price tends to rise.
# Instance
On 23rd April, the ETH price increased to $3,500. It marks a percentile growth of 5.2%. Meanwhile, BTC increased 4.8% to reach the level of $72,000. If you trace the movement closely, you will find that the coins are highly synchronized.
During any downward trend, the process is going to remain the same. Both coins will become highly volatile. The same was observed on 15th April.
On that day, ETH dropped a staggering 7.1%, and its value became $3,200 in congruence with BTC, which fell 6.9% to reach a value of $68,000.
# The Trading Implications
The trade effects of the implication are crucial. For ETH, it means that the investors can cash-in on the BTC’s movements. Whenever BTC grows it will be the leading indicator for ETH’s growth as well.
On 22nd Apr, the ETH/BTC pair reached a valuation of 12,500 BTC. Marking a sharp growth of 15% from the last day.
Similarly, SUI’s low link with BTC creates a scope for further diversification. Since it is not pegged to BTC, SUI remained at $1.20. However, BTC reached a drop mark of 3%.
