Crypto assets can be compared to children. Like all children, they have a mom and a dad. Mom is ETH. The main altcoin, with which the alt season starts and which is fundamentally fixed in our investment thoughts. Dad is BTC. The asset that needs no introduction represents a kind of a guide for the entire crypto market, which sets trends and holds most of the market capitalization.
Most coins correlate behind bitcoin due to their weakness in relation to the guide asset. Due to the lack of participants that move the price, coins are mostly managed by market makers and exchange correlators.
They are needed so that participants cannot greatly influence the price with their capitals, creating an efficient market. Assets are correlated to BTC for this reason. They have too little money in them to make movements with quality technical workouts, and there is nothing left for them but to repeat their movements in the wake of bitcoin.
The only example of a coin that enters into rascorelation out of most is a coin on volume. When the coin has participants and its capitalization is actively growing, it is absolutely indifferent to the behavior of bitcoin. Impulsive strong movements of the main cryptocurrency can be taken as an exception.
Correlation has its own hierarchy, the end of which is outside the cryptocurrency world.
Almost all coins are correlated behind Ethereum. Its status as the second major coin keeps a benchmark for the entire altcoin market, especially the coins on its blockchain.
Etherium correlates behind bitcoin. The crypto mastodon with almost half of the capitalization of the entire digital currency market sets the trend for the main altcoin. To understand when the correlation will decrease, it is enough to analyze the bitcoin dominance index. When quotes will actively decline, it is a direct signal to the growth of Ethereum.
Bitcoin is correlated with the NASDAQ and S&P indices. NASDAQ is an index of the total capitalization of companies in the high-tech sector. It includes companies such as Apple and Google. The S&P is an index of 500 companies with the largest market capitalization.
Bitcoin is honored to correlate with the largest macroeconomic indices. This means that the paths of the world’s big money and his are crossing and ready to run parallel. This is favorable for the early mass acceptance of cryptocurrencies.
In cases where everything and behind everything is correlated, it signals the doldrums in the economic environment. The guide indexes goes at its own pace and its subordinates follow unwaveringly. You can make money in that market when part of its food chain takes on a life of its own.
