Bitcoin’s Correlation With Altcoins Declines in Q2
The average correlation between Bitcoin and most other large cryptoassets declined in Q2 2019 unlike the previous quarter, a Binance’s Crypto-Correlations Review has shown. Though general correlations amongst other cryptoassets remained quite high in Q2, the report says Bitcoin’s correlations with altcoins decreased in average correlation of -0.11. This shows by the overall market capitalization rising by 139% while altcoin aggregated market capitalization (including stablecoins) increased by 71% over the same period.
Two assets that have a positive correlation tend to move in the same direction and therefore share similar risks. Binance attributes changes in its sequence to a likely “flight-to-quality” behavior by crypto investors in an early bull-market state. The observation comes as the overall performance of cryptoasset market is said to have recorded an extremely positive move in the first six months of 2019 despite a pullback in the final days of Q2 2019 and the year has so far seen cryptoasset markets experience “the best 3-month growth (measured by the change in overall market cap) since 2017”.
“The total value of the cryptoasset industry rose by +139% in the past quarter, marking the third best quarter the industry has seen since 2014,” it says, adding, “In absolute dollar terms, the total USD value of cryptoassets increased by roughly $199 billion in the second quarter of 2019, the second-highest quarterly growth on record, ranked only behind the bull run of 2017 Q4.”
The overall correlation between the top 30 of the largest cryptoassets (excluding stablecoins) remain quite high (most exhibit correlations above 0.5 with other cryptoassets) while the average correlation between Bitcoin and all other major cryptoassets fell from 0.73 to 0.61 in the second quarter. Other Proof of Work cryptoassets like BCH and DOGE exhibited lower average correlations with other cryptoassets than in Q1 2019 while Bitcoin SV’s (BSV) average correlation fell the most probably for its being delisted from Kraken and Binance.
The report’s release coincide with the sharp drop in the transaction per block that hit the Bitcoin Cash (BCH) network ( from 412 to 67) in the first two days of July after months of steady growth, according to Coin Dance. The crypto statistics platform shows in its daily average transactions per block by network summary that the sharp nosedive particularly by July 1 started gradually on Jun 28. It also shows that Bitcoin on the other hand maintains a straight line pace while Bitcoin SV (BSV) points in an upward direction. BCH block size also dropped from 160KB to 61.3KB within the same period. Yet, Roger Ver maintains BCH currently has the second highest transaction volume of all cryptocurrencies even as Binance Jersey opened trading for the BCH/EUR and BCH/GBP pairs on July 5.