Journalist
Posted:
- BNB’s 60-day correlation with Bitcoin fell from 80% in 2022 to 60% in 2023.
- Bitcoin’s market capitalization grew from 39% at the start of the year to 51% at the time of writing.
Bitcoin [BTC] has taken full advantage of the excitement surrounding potential spot ETF approvals in recent months. The optimism resulted in a steady increase in numbers institutional investments in the king coin, according to digital asset manager Coinshares.
Bitcoin continues unscathed
The largest digital asset in the world has more than doubled has risen in value since the beginning of the year, leaving the horrors of the crypto winter well behind it.
Upon further investigation, it was found that the coin has been very stable in 2023, unaffected by developments affecting other cryptos on the market.
Even the latest Binance/Changpeng Zhao (CZ) fiasco couldn’t give BTC any major scares. A similar story unfolded earlier this year, when the prized asset remained resilient despite US regulators’ scrutiny of other altcoins.
According to AMBCrypto’s analysis of CoinMarketCap data, Bitcoin’s market capitalization has increased from 39% at the start of the year to 51% at the time of writing. At the same time, the market share of some popular coins such as BNB shrank significantly.
Source: CoinMarketCap
Bitcoin is breaking away from the rest of the market
The reason lies in Bitcoin’s increasing decoupling from altcoins by 2023, according to a report from a crypto market data provider. Kaiko. The decorrelation helped strengthen Bitcoin’s image as a portfolio diversifier.
As shown in the chart below, major altcoins include the BNB and Ripple [XRP]and Solana [SOL] were the most disconnected from the king’s coin.
Source: Kaiko
While BNB’s 60-day correlation with BTC fell from 80% in 2022 to 60% in 2023, XRP fell 75% to 45%. On the other hand, Cardano [ADA] and Dogecoin [DOGE] still maintained a strong relationship with the royal mint.
Good idea to buy Bitcoin?
When an asset no longer responds strongly to the price action of other similar assets, it makes financial sense to include it in the portfolio. Smart investors diversify their investments across different cryptos, reducing their exposure to one type of asset.
How many Worth 1,10,100 BNBs today?
In the current scenario, having Bitcoin in a portfolio can help limit losses if other cryptocurrencies collapse. Furthermore, investors who own large amounts of Bitcoin may be tempted not to purchase highly correlated assets.
All said and done, the above deductions should not be construed as investment advice. Traders and investors were advised by DYOR.