Ethereum Price was trading at 300 USD early November and almost tripled by mid-December. An impressive performance considering the fact that Ethereum was trading in the single digits in January 2017.
Our article today will look at Ethereum price performance relative to Bitcoin’s price performance. We hear a lot about how when Bitcoin price is making another all-time high, other cryptocurrencies would drop because capital would flow out of Altcoins in favor of Bitcoin. How true is that?
In other words, what can investors expect when Bitcoin price is running to the upside? And what to expect when the opposite happens and Bitcoin price is having a sharp retrace?
Looking at the below chart, we can see the vertical blue lines marking the tops in Bitcoin price. We do see that when Bitcoin starts dropping, Ethereum price will spike. But the spike most of the time is short and fast. If Bitcoin recovers after the initial retrace, Ethereum price will continue on it’s uptrend. If Bitcoin price continues to drop, Ethereum price will eventually follow.
What we derive from this is Bitcoin is the sector leader indeed and other Cryptocurrencies need the sector leader to perform to continue on a healthy uptrend. We also want to highlight that as fascinating as they can be, these correlations are not necessarily reliable because of the volatile nature of Cryptocurrencies and their vulnerability to the technological aspect. A good example is how Both Bitcoin and Ethereum price reacted to Segwit news and Ethereum Metropolis upgrade.
For that, our answer to our readers and Ethereum investors is that they need to keep an eye on Bitcoin price and its performance because it does impact the whole Crypto market. But they also need to remain objective by sticking to the price chart analysis of Ethereum or the cryptocurrency they are investing in. Based on our experience, price chart analysis is the key to succeeding in trading or investing in Cryptocurrencies.
If you want to read more about early correlations between Ethereum price and other Asset classes, you can read here our article about Ethereum price correlation with Gold and Ethereum price correlation with the USD.