The data show that Altcoins are break away from Bitcoin’s advantage. Here’s what it can mean for the market, based on historical trends.

Altcoins are witnessing a rapid decrease in correlation with bitcoins

In novel post WX, the Alphraktal analytical company discussed how the correlation between Bitcoins and Altcoins has changed. Correlation is an indicator that tracks how the prices of any two assets are. The record can gain both positive and negative values. In both cases, there are some relationships between assets, but the relative movement at their prices is different.

When the indicator has a positive value, it means that one resource reacts to movements in the other, moving in the same direction. The closer the record to 1, the stronger this relationship is. On the other hand, it is zero, suggests that there is a negative correlation between the assets: they move in opposite directions. In this case, the extreme point lies on -1.

If the correlation sits exactly at zero, he suggests that there is no connection between two prices. In statistics, this condition corresponds to independent variables.

Now there is a shared heat map by Aphraktal, which shows the trend of correlation between Bitcoins and various Altcoins in the sector:

As you can see above, the correlation between Bitcoins and various altcoins was close to 1 just earlier, but since then the indicator felt a quick decline. The average value of the indicator for these two has now immersed in the zero level, and even became slightly negative.

This change would suggest that although Altcoins have strictly followed in the footsteps of the original cryptocurrency, they are now following the map, which is more or less independent. However, this trend may not be a positive sign for the sector. “Historically low correlation is a red flag,” explains the analytical company. “It often precedes periods of high variability and mass liquidation – from short or longer.”

The map shows that the last time the correlation between Bitcoin and Altcoins has fallen to zero in May, and there was a price for the asset. In January, the same trend meant the peak of the market.

The latest low correlation between BTC and Alts appeared when various resources crashed and market dominance increased.

“Altcoins outweigh bitcoins in recent days, and daily signals suggest that it will remain more profitable in altcoins, not BTC,” notes the alpraction.

BTC price

At the time of writing, Bitcoin trads around USD 118,000, which is a decrease by over 2.5% last week.