Kaiko Research highlighted that the correlation between bitcoin and ethereum has fallen below its average of 0.71 for the first time since 2021.
This development It comes amid a broader market slowdown, with btc and eth prices falling nearly 6% over the past week, currently at $40,991 and $2,463, respectively.
Historically, btc and eth have demonstrated a strong correlation in their market movements. However, the recent divergence raises questions about ethereum's future trajectory, especially in light of its surge in trading volume with no corresponding signs of a rebound in the derivatives market. This phenomenon is in stark contrast to the btc market, which saw significant growth in anticipation of ETF approvals.
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Reflecting on bitcoin's past, it is noted that btc exhibited a remarkable 100% return over the past year, eclipsing ethereum's 60% gains. The approval of bitcoin spot ETFs marked a turning point; btc prices fell while eth saw a rally, fueled by speculation that it could be next to receive ETF approval.
Previously, investors had focused on “eth beta” tokens, such as Optimism (OP) and Arbitrum (ARB), which are closely tied to ethereum but with higher volatility. However, after the approval of the ETF, this trend reversed: these beta tokens saw a drop and eth showed relative resilience by recording the smallest drop.
The current scenario underlines the changing dynamics between bitcoin and ethereum. While btc's journey into ETFs catalyzed its presence in the market, ethereum's path seems less clear. Its reduced correlation with bitcoin suggests potential for independent market behavior. However, the lack of traditional recovery indicators in derivatives markets and the shift away from eth beta tokens after the approval of the btc ETF inject uncertainty.
