Interesting enough, Ravencoin, which is a fork of Bitcoin with the added feature of asset issuance, and transfer has a very low correlation with Bitcoin and most of the altcoins in the top 20. However, having a diversified portfolio of the top 20 coins, does not have the same effect as in trading stocks. In practice, when investing in the stock market, having a diversified portfolio reduces risk. It is notable that almost all of the cryptocurrencies have become more correlated with each other across the board. Image by the author | Density plot of the correlation of the top 20 coins from 2014 to 2019 Which coins can help diversify your portfolio? Note: All code used for the analysis can he found on my github page and the data comes from, from 2014 - 2019, for the top 100 cryptocurrencies by market cap. Nevertheless, end of 2019 looks similar to 2015, 20 … get ready to fill your bags. If it is possible to predict the next bull run: Speculative at best.Are stable coins actually stable: Generally they appear to be decoupled from altcoin price fluctuations.Which coins can help diversify your portfolio: There is generally a strong correlation between coins, hence it is difficult to diversify risk (Just buying and holding Bitcoin is a safe bet).TLDR: The correlation and trend between various cryptocurrencies are evaluated to understand: New to crypto? You can find a great overview about block-chain technology, cryptocurrency and how they are related to Satoshi Nakamoto’s innovation.
In this post, we look at correlation of the cryptocurrency market, using Python, to analyze and visualize how these markets have been evolving, and provide a base framework for deeper analysis.
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