Ethereum’s correlation to Bitcoin has been dropping since the DeFi boom of Q3
The progress of ETH2.0 has further accelerated this
A drop in Ethereum’s correlation to Bitcoin hints of an altseason
The weekly ETH/BTC chart is bullish and is another clear indicator of a pending altseason
Ethereum’s correlation to Bitcoin has been dropping continuously since the DeFi boom of Q3 and has continued to drop as ETH2.0 gathers steam. According to data from Coinmetrics, Ethereum’s 30-day correlation to Bitcoin has dropped to 0.422. This value is the lowest it has been since January 2018 and could be the first clue of an altseason up ahead.
The chart below courtesy of Coinmetrics further demonstrates this fact.
ETH/BTC Weekly Chart is Exhibiting Bullishness
On a macro level, the weekly ETH/BTC is exhibiting bullishness. To begin with, and as seen in the chart below, the weekly Heiken Ashi candle is in the green two days into the last week of November. The weekly trade volume is also in the green and for the first time since the third quarter of 2020 during the aforementioned DeFi boom.
With respect to moving averages, Ethereum’s value at 0.0312 BTC is above the 50 and 100-week moving averages thus confirming the bullishness. The 200-week moving average provides an area of resistance around the 0.042 BTC level which was also an area of rejection for Ethereum in August this year.
The weekly MACD is also exhibiting bullish momentum and is attempting to cross above the baseline. The weekly MFI and RSI are at 44 and 56 respectively which is neutral territory and could hint of moderate gains by ETH against Bitcoin in the weeks to follow.
Summing it up, Ethereum’s correlation to Bitcoin has been dropping since the DeFi boom of Q3 and has recently been accelerated by the progress of ETH2.0. The drop could be the first confirmation of an altseason up ahead. The weekly ETH/BTC further confirms this as Ethereum attempts to retest or break the August peak of 0.042 BTC.
As with all analyses of Ethereum, traders and investors are advised to have an eye out for any sudden moves by Bitcoin in either direction that might ruin the party.