Luke Martin, a popular cryptocurrency trader and analyst with nearly 200,000 Twitter followers, recently presented an in-depth analysis of the correlation between Bitcoin and altcoin/BTC price movements to his large following via a 10-tweet thread.
Correlation between $BTC & Altcoin/BTC price is high. True historically & currently. Put simply: if $BTC is rising, most alts rise vs $BTC.
It's not that simple though.
Market cap groups (large vs mid) of alts rise at different times relative to the $BTC move. Evidence below…
— Luke Martin (@VentureCoinist) March 6, 2019
According to Martin, the correlation between Bitcoin (BTC) and altcoin/BTC prices remains high. He further added that if Bitcoin rises, most altcoins will rise even more vs Bitcoin. He also said that this has been true historically and remains true today.
However, as stated in the tweet, it’s actually not that simple. Martin goes on to explain that different market capitalization groups (large cap, mid cap, and small cap) rise at different times relative to Bitcoin’s price movements.
A Deep Analysis of BTC and Altcoins’ Price Movements
The second tweet in Martin’s insightful Twitter thread pointed out that Bitcoin had found a local bottom at $3,200, and during a time period of 3 months, Bitcoin had risen to $4,100 twice.
Adding to this, Martin said:
“While I wouldn’t call either of the ~20 day swings a full cycle, it does give very clear insight into how large cap vs mid-cap alts react to Bitcoin rising & dropping.”
Martin then explained the correlation between Bitcoin, large-cap, and mid-cap price movements, stating that when Bitcoin first went to $4,100, it did so very quickly in a sharp movement upwards. He then pointed out two things:
- “Large caps kept pace or outperformed $BTC.”
- “Most mid-caps/binance alts were sluggish, lagged $BTC and were down or flat.”
Following Bitcoin’s pump to $4,100, Martin notes that it dropped 10% and altcoins reacted to the price plummet:
- “Large caps dropped with BTC/USD, and almost at same exact time”
- “Mid-caps only dropped briefly and by smaller %. Then they jump higher RIGHT after large-cap momentum stopped.”
Following the two scenarios of Bitcoin rising and then falling, as described above, Martin described two more similar scenarios in which Bitcoin, large-cap, and mid-cap altcoins reacted in the same fashion.
He then stated:
“Bitcoin drives nearly everything in the crypto market. It’s incredibly helpful to consider the windows/timing that different groups of alts are moving to better position yourself according to how Bitcoin is moving.”
Takeaways from the Analysis
Per Martin’s analysis, there are 3 key points to take away from Bitcoin’s two “microcycles” as described above. As put by Martin, the key takeaways can be used as a sort of guide for altcoin positioning when trading.
The 3 key takeaways are:
- “Large caps move first.”
- “Large caps finding top at same time $BTC does.”
- “Generally mid caps are slightly AFTER large caps, then outperform.”
To conclude his Twitter thread, Martin proclaimed that understanding the macro altcoin landscape is far more important than any one altcoin chart. He then added:
“Having more exposure to large caps in periods large caps should outperform mid caps makes next decision of choosing a specific coin to buy easier.”
What do you think about Luke Martin’s analysis of Bitcoin’s correlation to large-cap and mid-cap altcoins? Do you agree? Let us know in the comment section below.
