Bitcoin Correlation with Other Cryptocurrencies: Understanding Intermarket Analysis

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A colorful background with a network of dots and circles that exemplifies the correlation between Bitcoin and other cryptocurrencies.

Are you curious about how Bitcoin interacts with other cryptocurrencies? It’s a fact: Bitcoin, the pioneering digital asset, has begun to show correlations with other asset classes, much like a commodity.

In this article, we will explore the world of intermarket analysis, deciphering patterns and relationships that exist between Bitcoin and various financial assets. Keep reading to unlock intriguing insights on why understanding these connections can be your next game-changer in cryptocurrency trading.

Bitcoin Correlation with Other Cryptocurrencies: Understanding Intermarket Analysis

Bitcoin’s correlation with other cryptocurrencies plays a pivotal role in intermarket analysis within the digital asset space. Often, Bitcoin’s price movements set the tone for the broader crypto market, leading other altcoins in bullish or bearish trends.

This phenomenon, termed the “Bitcoin Dominance,” highlights Bitcoin’s influence as the premier cryptocurrency. However, there are periods when specific altcoins decouple and move contrary to Bitcoin’s direction, based on their unique developments or news.

Recognizing these correlation patterns helps investors diversify their portfolios and hedge risks. Moreover, understanding when altcoins move independently of Bitcoin can signal unique value propositions or market sentiment shifts for those specific assets.

Key Takeaways

  • Bitcoin is showing correlations with other asset classes, resembling a commodity in its behavior.
  • Intermarket analysis involves examining relationships between different asset classes to understand market trends and trading opportunities.
  • Bitcoin’s correlation with traditional assets like stocks has been increasing recently, indicating changing dynamics in the cryptocurrency market.
  • Factors such as supply and demand, investor sentiments, economic conditions, monetary policy decisions, geopolitics, regulation issues, and developmental progress can influence stock and cryptocurrency prices.

Understanding Intermarket Analysis

Intermarket analysis is the examination of relationships between different asset classes, such as stocks, currencies, bonds, and commodities, to gain insights into market trends and potential trading opportunities.

What is Intermarket Analysis?

Intermarket analysis is a method that traders use. They look at the ties between different kinds of assets. These can be things like money from different countries, shares in companies, bonds, and goods.

This way of looking at markets helps to see how costs are linked across various types of items. For example, Bitcoin has shown links with other classes just as goods would. It’s about finding these patterns for better trading choices.

Traditional Intermarket Relationships

Traditional intermarket relationships refer to the historical correlations between different asset classes such as currencies, shares, bonds, and commodities. In the past, Bitcoin had a low correlation with these traditional assets.

In recent times, Bitcoin has started correlating more closely with other markets like a commodity would. This means that changes in one market can have an impact on the price of Bitcoin.

There is evidence of a relationship between Bitcoin and the stock market, as shown by Bitcoin’s correlation with the S&P 500. It is important for investors to monitor these intermarket relationships in order to make informed trading decisions and assess potential risks and opportunities in the cryptocurrency market.

New Normal Relationships in Deflationary Times

In deflationary times, the relationships between different assets can change. This means that their prices might start moving in similar ways or become more connected. It’s like when you see a group of friends who usually do different activities suddenly doing the same thing together.

In the world of cryptocurrencies, Bitcoin has started to correlate with other asset classes, like commodities. This means that if one goes up or down in price, it could affect Bitcoin too.

Traders have noticed these changes and are studying them closely to understand how they can impact their trading decisions.

Bitcoin’s correlation with traditional asset classes has historically been low, but recently it has been rising. In fact, in 2020, Bitcoin set a record for its correlation to other assets.

One example is its relationship with the stock market, specifically the S&P 500 index. So even though Bitcoin is still known as a separate digital currency, it’s becoming more intertwined with other financial markets.

Where Does Bitcoin Fit In?

Bitcoin fits in as a unique asset class within the world of intermarket analysis. Intermarket analysis involves studying how different types of assets, such as currencies, stocks, bonds, and commodities, are related to each other in terms of their price movements.

In recent years, Bitcoin has started to be treated more like a commodity than just another form of currency. This means that its price can be influenced by factors such as supply and demand dynamics, investor sentiment and expectations, economic conditions, monetary policy decisions, geopolitics, regulation issues, and developmental progress.

One interesting aspect is Bitcoin’s correlation with other cryptocurrencies. Among the largest coins by market capitalization like Ethereum (BTC/ETH), there is a high correlation observed between them.

Bitcoin has historically had low correlations with traditional asset classes like stocks or bonds but this correlation seems to be increasing recently. For example in 2020 alone it set records for its relationship with other assets.

Understanding where Bitcoin fits in helps traders analyze trends and make better trading decisions based on patterns they observe across different markets. However,it is important to note that predicting future behavior remains challenging due to various factors at play in the cryptocurrency market.

Factors Affecting Stock and Cryptocurrency Prices

Factors such as supply and demand, investor sentiments, economic conditions, monetary policy, geopolitics, regulation, and developmental issues all play a crucial role in influencing stock and cryptocurrency prices.

Understanding these factors can provide valuable insights for investors seeking to navigate the complex world of intermarket analysis.

Supply and Demand

Supply and demand play a significant role in determining the prices of Bitcoin and other cryptocurrencies. When there is high demand for Bitcoin, but the supply is limited, the price tends to go up.

When there is low demand or an oversupply of Bitcoin, the price can decrease. Factors that affect supply and demand include investor sentiments and expectations, economic conditions, monetary policy decisions by central banks, geopolitical events, regulation related to cryptocurrencies, and developmental issues within the crypto industry.

Understand these factors as they can influence market prices and impact your trading decisions.

Investor Sentiments and Expectations

Investor sentiments and expectations play a crucial role in influencing the prices of stocks and cryptocurrencies. The emotions, beliefs, and attitudes of investors can have a significant impact on market trends.

When there is positive sentiment towards Bitcoin or other cryptocurrencies, more people may be willing to invest, leading to an increase in demand and potentially higher prices.

If investors are pessimistic or uncertain about the future of cryptocurrencies, it could lead to selling pressure and lower prices. Economic conditions, geopolitical events, and regulatory developments also contribute to investor sentiments and expectations.

Economic Conditions

Economic conditions play a significant role in determining the prices of stocks and cryptocurrencies. Factors such as economic growth, inflation rates, unemployment levels, and consumer confidence can all impact market prices.

During times of strong economic growth and low unemployment, investor sentiment tends to be positive, leading to higher stock and cryptocurrency prices. On the other hand, during periods of economic recessions or uncertainty, investors may become more cautious and sell their assets, causing prices to decline.

Monetary policies implemented by central banks can also influence economic conditions and subsequently affect market prices. Changes in interest rates or money supply can impact borrowing costs and investment decisions.

Monetary Policy

Monetary policy plays a significant role in the factors affecting stock and cryptocurrency prices. Changes in monetary policy, such as interest rate decisions made by central banks, can impact investor sentiment and expectations.

Economic conditions also influence monetary policy, with governments making adjustments to stimulate or stabilize the economy. In 2020, Bitcoin’s correlation to traditional asset classes reached a record high, indicating that changes in monetary policy can have an impact on the cryptocurrency market.

Understanding how monetary policy affects these markets is crucial for investors to make informed trading decisions.


Geopolitics plays a role in the prices of stocks and cryptocurrencies like Bitcoin. The political landscape and events around the world can impact investor sentiments, expectations, and economic conditions.

For example, decisions made by governments or regulatory bodies can affect the supply and demand of assets like Bitcoin. Additionally, geopolitical tensions or conflicts may lead investors to seek safe havens such as cryptocurrencies, which can influence their prices.

Therefore, it is important for investors to keep an eye on geopolitical developments when analyzing the market trends and making trading decisions.


Regulation is an important factor that can affect the prices and market behavior of Bitcoin and other cryptocurrencies. The cryptocurrency industry has faced increasing scrutiny from regulators around the world.

Governments are implementing regulations to address concerns such as money laundering, fraud, and investor protection. These regulations can impact the trading, taxation, and overall legality of cryptocurrencies in different jurisdictions.

As a result, regulatory actions or announcements can have a significant impact on cryptocurrency prices and market sentiment. It is important for investors to stay informed about regulatory developments and understand their potential effects on the cryptocurrency market.

Developmental Issues

Developmental issues in the context of Bitcoin and other cryptocurrencies refer to challenges or obstacles that may arise during their growth and evolution. As the cryptocurrency market continues to develop, there are several key issues to consider.

One such issue is the regulatory landscape surrounding cryptocurrencies, with governments around the world still grappling with how best to approach and regulate this emerging asset class.

Another issue relates to scalability, as cryptocurrencies like Bitcoin face challenges in handling large transaction volumes quickly and efficiently. Additionally, security remains a concern, with instances of hacks and thefts highlighting vulnerabilities within the crypto ecosystem.

Bitcoin Correlation with Other Cryptocurrencies

Bitcoin’s Low Correlation with Other Markets

Bitcoin has historically shown a low correlation with traditional asset classes. This means that its price movements do not closely follow the trends of stocks, bonds, or commodities.

This correlation has been increasing in recent years. In 2020, Bitcoin set a record for its correlation with other assets. There is also a relationship between Bitcoin and the stock market, as evidenced by its correlation with the S&P 500.

While Bitcoin may have some correlation to other markets, it still maintains a relatively low level compared to traditional financial assets.

Correlation Between Bitcoin and Ethereum (BTC/ETH)

Bitcoin and Ethereum, the two largest coins by market capitalization, closely correlate with each other in price movements. This close correlation can be attributed to the fact they both dominate the cryptocurrency market and are often seen as indicators of the overall health of the crypto market.

Bitcoin vs EthereumCorrelation
Market DominanceBoth Bitcoin and Ethereum dominate the cryptocurrency market space, contributing to their high correlation.
Market IndicatorsThe movements of Bitcoin and Ethereum prices are often viewed as indicators of the overall health of the crypto market.
Investor PerceptionInvestors often group Bitcoin and Ethereum together as the leading cryptocurrencies, which can affect their price movements simultaneously.
Technological DevelopmentBoth Bitcoin and Ethereum act as the base layer for many other cryptocurrencies and blockchain projects, which can drive their prices in the same direction.

The correlation between Bitcoin and Ethereum suggests that a significant price movement in one coin could potentially indicate a similar movement in the other.

Investors should be aware that while these correlations exist, they are not always consistent and can change based on various factors such as market sentiment, regulatory news, and technological advancements.

Implications for Investors

Investors should consider Bitcoin’s low correlation with other markets as a potential opportunity for diversification and risk management in their portfolios. They can also use intermarket analysis to identify trading positions and patterns in the cryptocurrency market.

Recognize the risks and challenges associated with intermarket analysis, such as the volatility of cryptocurrencies and the complexity of analyzing interconnectedness among different digital assets.

Trading Considerations

Trading Considerations:

  1. Understand the fundamental correlations when trading Bitcoin and other cryptocurrencies.
  2. Be aware that predicting market behavior and prices can be challenging.
  3. Take into account the correlation of different types of assets, including currencies, shares, bonds, and commodities.
  4. Pay attention to the high correlation between Bitcoin and Ethereum, the two largest coins.
  5. Recognize that Bitcoin’s correlation to traditional asset classes has historically been low but has been rising in recent times.
  6. Consider that Bitcoin’s correlation to other assets set a record in 2020.
  7. Take note of the relationship between Bitcoin and the stock market, as shown by its correlation with the S&P 500.
  8. Be mindful of volatility in cryptocurrency markets and factor that into your trading decisions.
  9. Stay updated on intermarket relationships in the crypto industry to better analyze market trends.
  10. Use tools like the Two Sigma Factor Lens and crypto correlation tables to assess trading positions and patterns.

Potential Benefits of Bitcoin’s Low Correlation

Bitcoin’s low correlation with traditional asset classes and other cryptocurrencies can offer potential benefits for investors. One key advantage is that it provides diversification in an investment portfolio.

Since Bitcoin often moves independently of other assets, its inclusion in a portfolio can help reduce overall risk and increase the chances of higher returns.

Another benefit is that Bitcoin’s low correlation allows it to act as a hedge against inflation and economic uncertainty. When traditional markets experience downturns or instability, Bitcoin has shown resilience and even potential for growth.

This makes it an attractive option for investors looking to protect their wealth during times of economic turbulence.

Bitcoin’s low correlation can provide opportunities for trading strategies. By analyzing price trends and correlations between different assets, traders can identify patterns and potentially profit from market inefficiencies.

Risks and Challenges of Intermarket Analysis

Intermarket analysis comes with its own risks and challenges that traders should be aware of. Here are some key points to consider:

  1. Price correlations can change: Intermarket relationships can shift over time, so a correlation that exists today may not hold true in the future. It is important to regularly reassess correlations and adjust trading strategies accordingly.
  2. Volatility can affect correlations: Cryptocurrencies are known for their high volatility, which can impact price correlations. Sudden market movements or events can disrupt previously established relationships between assets.
  3. Limited historical data: The cryptocurrency market is relatively new, and historical data may be limited compared to traditional asset classes. This can make it more challenging to accurately assess correlations and predict future price movements.
  4. Market manipulation: As with any financial market, there is a risk of market manipulation in the cryptocurrency space. This can distort price correlations and make it difficult to rely solely on intermarket analysis for trading decisions.
  5. Lack of regulation: The lack of regulatory oversight in the cryptocurrency industry adds an additional layer of risk. Without clear rules and guidelines, it becomes harder to predict how external factors like regulation or government intervention might impact prices.
  6. Complex market dynamics: The interconnectedness of cryptocurrencies and their underlying technologies creates complex market dynamics. Understanding these dynamics requires deep knowledge of the crypto industry and its various components.
  7. Emotional biases: Traders’ emotions can influence their decision-making process, leading them to rely too heavily on certain intermarket relationships or overlook others. Emotional biases should be managed carefully to avoid making uninformed trading decisions.


Understanding the correlation between Bitcoin and other cryptocurrencies is crucial for investors. Through intermarket analysis, traders can identify patterns and trading opportunities.

While Bitcoin has historically had a low correlation with traditional asset classes, its correlation with other cryptocurrencies like Ethereum has been significant. However, predicting market behavior in the volatile cryptocurrency industry remains challenging.

By studying these correlations and trends, investors can make informed decisions and manage their risks effectively.


What is Bitcoin correlation with other cryptocurrencies?

Bitcoin correlation with other cryptocurrencies means how the price of bitcoin moves in comparison to prices of other cryptocurrencies.

How can understanding cryptocurrency correlations help my trading?

Understanding cryptocurrency correlations can aid in risk analysis. It helps predict market trends and make wise choices while trading Bitcoin or other cryptos.

What is Intermarket analysis in the crypto industry?

Intermarket analysis in the crypto industry studies links between different types of markets, like stock prices and cryptocurrencies, to forecast trends.

Can I rely on Bitcoin price correlation for all my trades?

Relying solely on Bitcoin price correlation may not be safe due to high cryptocurrency volatility. Always consider multiple factors when planning your trades.



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About the Author:
Jordan Adams, with a rich background in Finance and Economics and specialized knowledge in blockchain, is a distinguished voice in the cryptocurrency community. Their journey in fintech and digital currency trading has equipped them to offer unique insights into digital finance. Jordan's writing demystifies cryptocurrency concepts with well-researched, practical advice. Engaged in the crypto community, Jordan shares timely market insights, fostering understanding of complex technologies and their practical applications in the evolving digital currency landscape.