DAppRadar: The price correlation between BTC and ETH and DOT exceeds 80%?

Bitcoin price during the first week of January 2021 A year-on-year increase of 414%, breaking through $38,000. The surge was sparked in part by increased interest from institutional investors and retail investors at large. Not surprisingly, the surge in the price of Bitcoin has also had an impact on the token prices of other mainstream cryptocurrencies.

Source: Coingecko

This roundup examines Bitcoin and certain The interdependence between the prices of some altcoins. Additionally, we analyze the impact on the largest blockchain ecosystem - DeFi. Analyzed from Total Value Locked (TVL) and DAppRadar’s unique Adjusted Total Value Locked (aTVL) metric.

Main harvest

The price of Bitcoin broke through $38,000. One of the main catalysts for Bitcoin's rise has been institutional adoption and wider retail access.

In the past 30 days, Ethereum (ETH), Cardano (ADA), Polkadot (DOT), Binance (BNB), Near (NEAR) and VeChain (VET) The correlation with Bitcoin price reaches 80% to 95%.

The top Ethereum DeFi DApp tokens MKR, Sushi, Uni, AAVE and SNX have shown 60% to 80% correlation with Bitcoin price in the past 30 days sex.

While the recent price rally paints a distorted view of the DeFi ecosystem, DAppRadar's aTVL metric presents a truer picture of the ecosystem's growth.

Research Methodology

Collected the top 100 cryptocurrencies by market capitalization from Coinecko , excluding stablecoins. These cryptocurrencies are then classified as blockchain cryptocurrencies and Ethereum DeFi DApp cryptocurrencies respectively.

We then calculated the correlation between Bitcoin and these altcoin prices over the past 30 days.

The price of bitcoin breaks through $37,000

Recently, bitcoin has experienced massive growth. In 2020, the price of Bitcoin took off from $7,195. As of now, the price of Bitcoin has reached a peak of $40,000, and it continues to climb.

Bitcoin has rallied about 90% in the past 30 days as growing institutional interest has tightened supply. Investments from large institutions such as MicroStrategy and large companies such as Grayscale have led to increased investor interest.

According to a report by Pantera Capital in December 2020, the recent surge in the price of Bitcoin was largely driven by leading fintech giants PayPal and Square. PayPal and Square's CashApp buy up nearly 100% of all the new supply of Bitcoin that enters the market each day.

Pantera Capital came to this conclusion by analyzing iBit cryptocurrency trading volume. “iBit” is operated by Paxos, PayPal’s cryptocurrency brokerage service.

Additionally, the widespread presence and increased visibility of platforms such as Coinbase and Crypto.com have made it easy for retail investors to participate. Overall, there has been a surge in general interest around Bitcoin over the past 30 days, as can be seen in the google trends analysis below.

Source: Google Trends

Ethereum and other altcoins benefit from Bitcoin's rally.

It can be said that traders and institutional players have deep pockets, gradually crowding Bitcoin trading, while retail investors are Follow ETH.

Source: Coingecko

Blockchain Cryptocurrency and Bitcoin Correlation of prices

The first group to analyze is the mainstream cryptocurrencies. The most notable cryptocurrencies showing strong correlation with Bitcoin are Ethereum (ETH), Cardano (ADA), Polkadot (DOT), Binance (BNB), Near (NEAR) and VeChain (VET), the correlation Between 80% and 95%.

Interestingly, the most promising blockchain coins such as Ethereum, Cardano, Polkadot, Binance and NEAR have the highest correlation with Bitcoin.

Source: Coingecko

Ethereum DApp token price Correlation with Bitcoin Price

The second category to study is the top Ethereum DApp cryptocurrency. The token prices of DApps built on the Ethereum protocol have no correlation, excluding MKR, Sushi, UNI, AAVE, and SNX tokens, because their correlation is between 60%-80%, indicating that the correlation is very strong.

It appears that the top performing DeFi DApp tokens have been quickly recognized by investors.

Surge in token prices paints a distorted picture of the DeFi ecosystem.

These price spikes had a dramatic impact on the most valuable metric in the DeFi ecosystem - TVL. According to the DAppRadar DeFi page, TVL has soared to over $22 billion in the past few days. Such predictions may suggest a distorted view, as the main driver is a surge in token prices.

aTVL aims to eliminate price effects by locking the token price for 30 days. Moreover, when accompanied by unique active wallet data is undoubtedly a better indicator of the growth of the DeFi ecosystem.

With Ethereum and other altcoins skyrocketing in price, aTVL can show the true growth of assets added to smart contracts.

Source: DAppRadar

Summary

At the time of writing, the Bitcoin price has increased by 414% year-on-year and continues to climb. The biggest triggers are institutional adoption and wider access through Paypal.

The high correlation between the top cryptocurrencies and Bitcoin prices shows that the token of the most promising blockchain is the next one after Bitcoin choose. Similarly, Ethereum DeFi tokens are the next choice in terms of top Ethereum DApp tokens.

The increase has severely affected the TVL metric that is widely used to measure the growth of the DeFi ecosystem. And aTVL shows the real DeFi ecosystem trend.

Original link

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia