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Correlation between cryptocurrency prices is decreasing, but still strong

Larry Cermak
Cross-asset correlations are still high, but they seem to be decreasing, according to new analysis by The Block. A major issue for cryptocurrency investors is the inability to truly diversify their cryptocurrency holdings.The post Correlation between cryptocurrency prices is decreasing, but still strong appeared first on The Block.

Cross-asset correlations are still high, but they seem to be decreasing, according to new analysis by The Block. 

A major issue for cryptocurrency investors is the inability to truly diversify their cryptocurrency holdings. When the price of one cryptocurrency falls, generally the majority of other cryptocurrencies will fall as well.

The lack of uncorrelated permissionless cryptocurrencies has a negative effect on the creation of on-chain crypto-collateralized derivative markets with sufficient liquidity.

In early January, The Block performed a similar analysis and found that cryptocurrency prices were highly correlated in 2018, with correlation growing substantially from 2017. In 2018, the most correlated cryptocurrency was Ethereum followed by Bitcoin while the least correlated was TRON.

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