Correlation of Cryptocurrencies
Correlation among cryptocurrencies is a phenomenon observed in regard to the evolution of cryptocurrency prices. Since Bitcoin is by far the largest cryptocurrency in terms of market capitalization many other cryptocurrencies tend to trade similarly as Bitcoin. The positive correlation observed in the cryptocurrency market has the consequence that the prices among most cryptocurrencies fall and rise simultaneously. Although the correlation between almost all cryptocurrencies and Bitcoin is positive, the degree of correlation varies among cryptocurrencies.
Measurement of Correlation
Correlation is measured on a scale from +1, representing perfect positive correlation to -1, representing perfect negative correlation, with 0 indicating no correlation at all between cryptocurrencies.