Does Correlation Between Bitcoin Price and Altcoins Mean Buy the Dips?

Bitcoin (BTC) price reached a new 2020 high on Feb. 13, 2020, crossing $10,497 following a 42% gain since the start of the year. This appreciation in price has led crypto analysts to suggest that a new bull run is in its early stages and some estimate that the price will reach a new all-time high at $27,000 by summer. Other analysts believe the price will reach the coveted $100,000 mark right before the start of 2021.

Cryptocurrency market daily overview. Source: Coin360

Alongside Bitcoins price gain, altcoins have been surging as well. Over the past week NEM and Tezos (XTZ) posted amazing double-digit gains, raising the idea that altcoins and Bitcoin bull periods may be correlated.

Lets investigate whether this correlation exists during bullish and bearish market conditions.

Altcoin correlation during Bitcoin bullish periods

Bitcoin underwent a strong bullish trend from April 2019 to June 2019, producing a more than 200% return and reaching $13,800 in June. 26, 2019. Drawing the correlations between Bitcoin and the top 30 cryptocurrencies in the market today, we find that (58% of cryptocurrencies show correlations that are higher than 60% against Bitcoin in such periods.

A correlation of 0% means that the currencies are not correlated in any way, while 100% means the currencies are fully positively correlated. Additionally, a correlation of -100% means the currencies are fully inversely correlated.

The most notable currencies correlated with Bitcoin are Ether (ETH), Dash, Bitcoin Cash (BCH), Monero (XMR) and EOS with correlations between 74% and 82%. On the other side, USD Coin (USDC) has the lowest correlation from all currencies, with a negative relationship (-4.3%), followed by HedgeTrade (HEDG) with a 13.3% correlation.

Currencies like Chainlink (LINK), Cosmos (ATOM), Crypto.com Chain (CRO) and Huobi Token (HT) also show a low correlati ...

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