The data shows that the year of high correlation of Ethereum with Bitcoin will end with the metric calculating the ATH value.
Ethereum Ends 2022 With All Time High Correlation To Bitcoin
According to the year-end report from Arcane Research, the global market has fallen sharply in relation to this year. The “30-day correlation” is an indicator that measures how well Bitcoin has aligned with other assets in terms of price movements over a 30-day period.
When the value of this metric is greater than zero, it means that there is a positive correlation between BTC and other assets in the past month. On the other hand, a negative value indicates that the crypto price has reacted to changes in the value of other assets by moving in the opposite direction.
In addition, the higher the value of the metric (in either direction), the greater the degree of correlation. Of course, the metric has a value equal to zero indicating that the two prices are not related at the moment.
Now, here’s a chart showing Bitcoin’s 30-day correlation trend with Ethereum, the S&P 500, and the Nasdaq over the past year:
Looks like the metric's value corresponding to ETH has been very high in recent weeks | Source: Arcane Research's 2022 - Year in Review
As the graph above shows, Bitcoin is positively correlated with these three assets during 2022. The correlation of BTC has been around or above 0.5 for most of the year for US equities, suggesting that it is worth connecting with them.
The correlation with Ethereum, however, is already around 0.9 or more, which means that Bitcoin is already correlated with it. Even now, as of the end of the year, the correlation between these cryptos is at 0.97, around the ATH level.
Back in September of this year, ETH successfully completed the anticipated transition to the Proof-of-Stake consensus system, an event known as the Merger. Since Merger brought some unique developments to Ethereum, the correlation with BTC decreased, as seen in the chart.
However, it was not long before the two began to move on the same wavelength again, so even the merger was not enough to cause enough impact to separate the coins.
Also, since Bitcoin is highly correlated with stocks, so is Ethereum. Although, Arcane Research expects that the correlation between cryptos and US equities will weaken in the coming year as the trading volume in the crypto market drops significantly.
The lowest value of ETH
At the time of writing, the price of Ethereum is floating around $1,200, down 2% over the past week.
ETH seems to have gone down recently | Source: ETHUSD on TradingView
Featured images from Pierre Borthiry – Peiobty on Unsplash.com, charts from TradingView.com, Arcane Research