Altseason Euphoria Grows as Ether-Bitcoin Correlation Drops to 3-Year Low
As the crypto market appears set to end 2020 on a high, expectation appears to be growing for a possible altseason which could see altcoin tokens return to previous price milestones. This year’s positive price performance has also seen the total market capitalization grow over three times its value at the start of 2020.
Altseason on the Cards as Ether-Bitcoin Correlation Dips
According to data from crypto analytics provider Skew, the correlation between Ether (ETH) and Bitcoin (ETH) is at its lowest ebb in almost three years. As of press time, the 30-day ETH-BTC Realized Correlation is below 50% for the first time since January 2018.
Typically, a high ETH-BTC correlation points to impending market correction which often serves to truncate any upward momentum in the altcoin market. Indeed, periods of high ETH-BTC correlation usually coincide with downward price retraces for altcoins.
The declining ETH-BTC correlation trend seems to have been instigated by the Q3 2020 decentralized finance (DeFi) boom. Following the mid-2020 appearance of liquidity mining, the DeFi market took the industry by storm, generating a significant level of interest.
Apart from signifying a low probability of a market correction, the declining ETH-BTC correlation also offers another indication of an imminent altseason. Altcoins typically trail Bitcoin price advances with many tokens offering massive “moonshot” price actions even after the BTC advance has cooled.
Despite Bitcoin’s recent price gains, on the macro level, the ETH/BTC index is currently net positive for the second-largest crypto by market capitalization. Indeed, data from Tradingview shows that the ETH/BTC index is at its highest level since May 2019.
As previously reported by BTCManager back in Aug., the altseason narrative has been strengthening since the end of Q2 2020. At the time, the total altcoin market capitalization had breached a multi-year resistance, rising above $140 billion for the first time in over two years. As of press time, the total size of the altcoin market is north of $220 billion.
Altcoins Already Staging Massive Price Jumps
Within the last few days, several higher-cap altcoins have experienced significant price gains amid growing bullish sentiments in the crypto space. XRP is up over 140% over the last 7-day trading period following a massive surge that saw its price hit $0.9; its highest price level since May 2018.
Outside the “top-10” coins, Stellar (XLM) has also experienced a massive gain in price and is currently up 170% in the last week of trading. As of press time, XLM is one of the top gainers among the major altcoin tokens today with a 24-hour price surge of 30%.