DAppRadar: The price correlation between BTC and ETH and DOT exceeds 80%?

Analysis of the interdependence between Bitcoin and altcoin prices over the past 30 days.

Source: Coingecko

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Source: Coingecko

This roundup examines the interdependence between Bitcoin and certain altcoin prices over the past 30 days. Additionally, we analyze the impact on the largest blockchain ecosystem - DeFi. Analyzed from Total Value Locked (TVL) and DAppRadar’s unique Adjusted Total Value Locked (aTVL) metric.

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Top Ethereum DeFi DApp tokens MKR, Sushi, Uni, AAVE, and SNX have shown a 60% to 80% correlation with Bitcoin prices over the past 30 days.

Research methods

While the recent price rally paints a distorted view of the DeFi ecosystem, DAppRadar’s aTVL metric presents a truer picture of the ecosystem’s growth.

Research methods

Data for the top 100 cryptocurrencies by market capitalization was collected from Coinecko, excluding stablecoins. These cryptocurrencies are then categorized as blockchain cryptocurrencies and Ethereum DeFi DApp cryptocurrencies respectively.

The correlation between Bitcoin and these altcoin prices over the past 30 days was then calculated.

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Bitcoin price breaks through $37,000

Recently, Bitcoin has experienced massive growth. In 2020, the price of Bitcoin took off from $7,195. As of now, the price of Bitcoin has reached a peak of $40,000, and it continues to climb.

According to a report by Pantera Capital in December 2020, the recent surge in the price of Bitcoin was largely driven by leading fintech giants PayPal and Square. PayPal and Square's CashApp buy up nearly 100% of all the new supply of Bitcoin that enters the market each day.

Pantera Capital came to this conclusion by analyzing iBit cryptocurrency trading volumes. “iBit” is operated by Paxos, PayPal’s cryptocurrency brokerage service.

Additionally, the widespread presence and increased popularity of platforms such as Coinbase and Crypto.com have made it easy for retail investors to participate. Overall, there has been a surge in general interest around Bitcoin over the past 30 days, as can be seen in the google trends analysis below.

It can be said that traders and institutional players with deep pockets are gradually crowding Bitcoin trading, while retail investors are paying attention to ETH.

Source: Coingecko

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Source: Coingecko

Interestingly, the most promising blockchain coins such as Ethereum, Cardano, Polkadot, Binance and NEAR have the highest correlation with Bitcoin.

Source: Coingecko

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Source: Coingecko

The second category to study is the top Ethereum DApp cryptocurrency. The token prices of DApps built on the Ethereum protocol have no correlation, excluding MKR, Sushi, UNI, AAVE, and SNX tokens, because their correlation is between 60%-80%, indicating that the correlation is very strong.

Source: Coingecko

It appears that the top-performing DeFi DApp tokens have been quickly recognized by investors.

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Source: Coingecko

These price spikes had a dramatic impact on the most valuable metric in the DeFi ecosystem — TVL. According to the DAppRadar DeFi page, TVL has soared to over $22 billion in the past few days. Such predictions may suggest a distorted view, as the main driver is a surge in token prices.

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Summarize

Source: DAppRadar

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