Тhe report by Binance Research shows the crypto market has a lot of potential for bringing institutional investors in because the amount of cash in cryptocurrencies by institutional players is less than a third from the capital governments and banks are putting in regular stocks on the market.
Data shows that there is a high correlation in price volatility for the entire crypto sector – if the leaders lose some of their prices, the price of all cryptos surge down, and vice versa. The price movements, according to the report are most probably due to the retail-driven crypto market and the lack of strong institutional support for cryptocurrencies.
„Our Data reveal a strong correlation between Bitcoin and altcoin prices. When we analyzed the market, there was a 0.8 to 1.0 correlation, never seen in traditional markets.”, says in the report.
Report analysis shows that the trend settled after Bitcoin‘s price bubble burst in January 2018. After the market settled, Bitcoin and altcoins go hand-by-hand in price movements.
Binance Research, however, found that the trend is soon to be over and a negative correlation between Bitcoin and altcoins would occur.
“The peak in correlation was on March 13th. We believe that the period of high correlation is over due to the market finding its local maximum.
How will institutional players change the game?
Cryptocurrencies may see another massive price increase, thanks to more and more prominent companies, governments, and banks recognizing the potential of blockchain technology and cryptos. When other big players opt into using cryptocurrencies, the trading volumes will increase, thus – generating stronger and higher support zones for the whole cryptocurrency sector. The correlation will most probably lower itself due to banks recognizing altcoins much more than Bitcoin.