Luke Martin, a widely-followed cryptocurrency trader and analyst, has argued that the “correlation between bitcoin (BTC) and altcoin/BTC price [remains] high.”
Correlation between $BTC & Altcoin/BTC price is high. True historically & currently. Put simply: if $BTC is rising, most alts rise vs $BTC.— Luke Martin (@VentureCoinist) March 6, 2019
It's not that simple though.
Market cap groups (large vs mid) of alts rise at different times relative to the $BTC move. Evidence below...
According to Martin’s assessment, the strong correlation between altcoin/bitcoin and bitcoin/USD value is “true historically and currently.” In other words, if bitcoin is rising, then most altcoins also rise against BTC itself, Martin noted.
However, there’s more to it than that as Martin explained different market capitalization groups - such as large caps versus mid caps - of altcoins “rise at different times relative to” bitcoin’s price movements. Martin also pointed out to his nearly 200,000 followers on Twitter that in the past three months, bitcoin has “found a local bottom at $3,200, and [during that same time period] has risen to $4,100 twice.”
While I wouldn't call either of the ~20 day swings a full cycle, it does give very clear insight into how large cap vs mid cap alts react to Bitcoin rising & dropping.
Large, Mid Cap Price Movements Not Perfectly Correlated With Bitcoin
The full-time trader and analyst also noted that the “first push to [a] $4,100 bitcoin went nearly vertical [and] reached a high in about 4 days.” During this timeframe, Martin pointed out that:
- “Large caps kept pace or outperformed $BTC”,
- “Most mid caps/binance alts were sluggish, lagged $BTC and were down or flat.”
Commenting further on the price movements of the world’s most dominant cryptocurrency, Martin wrote that “after bitcoin’s initial push to $4,100, it dropped [by] 10%.” As the BTC price plummeted, Martin noted that:
- “Large caps dropped with BTC/USD, and almost at same exact time”,
- “Mid caps only dropped briefly and by smaller %. Then they jump higher RIGHT after large cap momentum stopped.”
Monitoring Altcoin Price Movements Can Be Helpful
He continued: “BTC found a local bottom [at] around $3,400 [and then] pushed to $4,100 again last week.” Meanwhile, Martin observed that the altcoin price movements were as follows:
- “Once again large caps move in sync with $BTC as it rises or outpace”,
- “Mid caps sluggish, flat, down slightly, or at least lagging large caps to start.”
Notably, he mentioned that “for a second time” bitcoin peaked at $4,100 and then dropped by as much as 10%. This time, Martin noticed the prices of most other major cryptocurrencies also dropped “immediately’ (just like they did last time) or “at least stopped [their] positive momentum.” Moreover, the mid cap coins “dropped briefly and then many, one at a time, start popping only after the large cap momentum stops.”
Bitcoin drives nearly everything in the crypto market. It's incredibly helpful to consider the windows/timing that different groups of alts are moving to better position yourself according to how Bitcoin is moving.