When it comes to cryptocurrency, Bitcoin is often the first thing that comes to mind. But what about the others? What are they correlated to?
Here’s a look at some of the most popular cryptocurrencies and how they’re correlated to Bitcoin.
Bitcoin Cash (BCH)
Bitcoin Cash is a fork of Bitcoin that was created in August 2017. While it shares many similarities with Bitcoin, there are also some key differences.
For one, Bitcoin Cash has a larger block size limit, meaning it can process more transactions per second. It also uses a different proof-of-work algorithm, which is meant to be ASIC-resistant.
When it comes to price, Bitcoin Cash is highly correlated to Bitcoin. In fact, over the past year, the two assets have had a Pearson correlation coefficient of 0.89.
That means that when Bitcoin’s price goes up, so does Bitcoin Cash’s price. And when Bitcoin’s price goes down, so does Bitcoin Cash’s price.
Ethereum is the second-largest cryptocurrency by market capitalization and it’s often referred to as the “world computer.” That’s because Ethereum isn’t just a digital currency, but a decentralized platform that can be used to build decentralized applications (dapps).
Ethereum also has its own programming language, called Solidity, which is used to write smart contracts.
When it comes to price, Ethereum is not as closely correlated to Bitcoin as some of the other assets on this list. In fact, over the past year, Ethereum and Bitcoin have had a Pearson correlation coefficient of just 0.
65. That means that while there is some relationship between the two asset prices, it’s not as strong as it is with some of the other assets on this list.
Ripple is a cryptocurrency that was created with the purpose of being used by banks and financial institutions for international money transfers. Ripple uses a technology called RippleNet which allows for near-instantaneous and low-cost transactions.
Ripple also has its own digital currency, called XRP, which is used to help facilitate these transactions.
When it comes to price, Ripple is not very closely correlated to Bitcoin. In fact, over the past year, Ripple and Bitcoin have had a Pearson correlation coefficient of just 0.
36. That means that while there is some relationship between the two asset prices, it’s not very strong.