Cryptocurrencies Still Strongly Correlated to Each Other and Show Weak Negative Correlation with S&P500

in cryptocurrency •  8 months ago

Every once in a while I check the correlations amongst cryptocurrencies and also with other asset classes like stocks and gold. Below you find a quick overview of the 90-day correlations.

Screen Shot 2018-08-31 at 09.57.16.png

Interesting to see that all cryptocurrencies are still very correlated to each other. Unfortunately the ‘newer’ projects are not in there. I suspect to see a slightly different pattern if they were included.

Cool to see as well is the negative correlation (although weak) with the stock market SPX (S&P500). I am very curious to see how this develops in the coming 6-12 months with the stock market reaching ATHs and a big correction seems evident.

Rolling correlations show that BTC and ETH seem to get less correlated over time in the last 60 days. The same goes for BTC and LSK. BTC and XMR are starting to get more correlated.

Screen Shot 2018-08-31 at 10.10.59.png

For those interested, the performance of the top coins in the last 30 days:

Screen Shot 2018-08-31 at 10.02.48.png

I look at the price movements almost every day but this shocked me a bit though. Especially ETH, NEO and NEM!

What are your thoughts on all of this?

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Disclaimer: I am not a financial advisor, trader or developer. I am just a blockchain & cryptocurrencies enthusiast. Make sure you do your own research, draw your own conclusions and do not invest any money that you cannot afford to lose.

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I do expect that when the correction starts at the stock market, that some of that money will flow towards the crypto markets. But hey, I had lot of assumptions last year and they are were wrong!
But there will be a time that my gut feeling will be correct :)


We share the same gut feeling! Hope you are correct. Seems so logical right? ;-)


It does. This will need to find new stocks to invest in. The interest rate at the banks are worthless. Not everybody can invest in real estate, so what is left? Yep cryptos.
It will also be more and more mainstream when the correction starts!


As Economist I have a different opinion. I don't think crypto will become mainstream in its current state. There is really no reason why ordinary people or companies need crypto. It doesn't solve any issue. In fact creates even more and is quite difficult to use safely.

The investors in the stock market are not likely to buy very large sums of Crypto instead of stock shares or bonds or real estate which they have now. Just because it is no investment with an underlying value, the safety risks are to high, no regulations, etc. The same goes for the normal persons, those will never invest more than a couple hundred or perhaps thousand dollars.

My feeling is also quite often incorrect, but at this moment I would guess that for now the hype is pretty much over. It could even be that as of now the prizes will only go down. And r never again will be increasing with thousand percent or higher.

@cryptotem tag to make sure you also read this reply.


Always great to read other perspectives and partially I agree with you. Crypto in its current state is not enough for mass adoption. There are very limited use cases that actually work. The use cases that do work have been those closely related to privacy and currency. I, for instance, still foresee a world in which a currency not controlled by one specific party (like USD, Yuan, EUR) who decides on supply and inflation, will become the default unit of account and world reserve currency. Whether this will be Bitcoin, I don't know.

Next to that, investing into crypto will become more and more like investing in companies. Pure utility token sales will disappear for the most part and investors/speculators will demand rights or equity. Crypto simultaneously will spark the transition from a world in which the great risk/reward deals only being available to the 'accredited investors' to a world in which everybody can join (at their own risk of course).

This is not a next-year reality. It will take at least a decade to see serious shifts. The financial status quo has too much to lose and will do everything in its power to slow down this evolution.


I agree that if their wil be a big impact by crypto currency that it will take at least a decade. And in the coming years some really improved crypto currency need to be launched.

I'm not sure if it will ever become the same as investing in companies. Because it just ain't a share. The crypto coin does not generate any profit, while each company does generate a profit (or loss).

And if crypto should be the same as fiat, then I will also air that it just works differently.

In the end only time can learn us if either one of us will be right. Most likely something totally different will happen 😀


Interesting Post, I love crypto currency and watch prices nearly every day since July last year. Really unlucky I started trading in a downwards market.
Anyhow, I think correlation between crypto currencies and stock market is not a big factor here. People are just trying to study the market. I believe there is a lot of market manupulation and huge pumps and dumps in crypto. Another factor are news FUD. In the other hand there are many crypto currencies developing behind the scene. I don't want to advertise here so I will not mention anything specific. Crypto prices will go high again in future. Nobody know the exact time, so let us just invest little for the time being.
In conclusion, I have learnt a lot from crypto and now I started my blog in steemit with a new experience.

Hope all the best to you all.


Welcome to Steemit @captain2020!

There is indeed of manipulation going on, like in any market. We all just have to grow up, professionalize and adopt. The future is bright :-)


That might be the case. At least so far it seems true ;-)

Interesting information thanks for sharing

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