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Declining Correlation Between Bitcoin and Ethereum Indicates Diversification Opportunities in Cryptocurrency Portfolios

The correlation of rates of the two most popular cryptocurrencies has historically been at a high level, but the indicator has been falling for over two months and has almost reached 80%.
This is the lowest level in a year and a half.

The 30-day moving correlation between bitcoin and ether fell below 80% this week, says service Kaiko. The indicator measures how closely the prices of two assets move together;

Kaiko analysts believe that the falling level of correlation between the major cryptocurrencies was the result of the banking crisis in the U.S. – it led to an increase in investments in protective assets, one of which is considered BTC.

In addition, the divergence in rates was affected by the Shanghai update to the Etherium network, which allowed users to withdraw coins from stacking.

It was the most anticipated update to the second cryptocurrency network.

The drop in the index suggests that a diversified cryptocurrency portfolio should have both coins, Kaiko experts believe.

In late April, analyst firm Santiment noted that the correlation between most tokens and cryptocurrencies has dropped significantly and is “virtually non-existent.”