- BNB’s 60-day correlation with Bitcoin plunged from 80% in 2022 to 60% in 2023.
- Bitcoin’s market cap expanded from 39% at the start of the year to 51% at press time.
Bitcoin [BTC] has been riding high on the enthusiasm surrounding potential spot ETF approvals over the last few months. The optimism resulted in a steady increase in institutional investments into the king coin, according to digital asset manager Coinshares.
Bitcoin moves ahead unscathed
The world’s largest digital asset has more than doubled in value since the beginning of the year, leaving the horrors of the crypto winter well behind.
A closer examination revealed that the coin has been rock steady in 2023, unfazed by developments impacting other cryptos in the market.
In fact, even the latest Binance/Changpeng Zhao (CZ) fiasco failed to give a big scare to BTC. A similar story unfolded earlier in the year when the prized asset managed to stay resilient despite U.S. regulators’ scrutiny of other altcoins.
According to AMBCrypto’s analysis of CoinMarketCap’s data, Bitcoin’s market cap has expanded 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 like BNB shrunk considerably.
Source: CoinMarketCap
Bitcoin detaches from the rest of the market
The reason lies in Bitcoin’s increased decoupling from altcoins in 2023, as per a report by crypto market data provider Kaiko. The de-correlation helped in boosting Bitcoin’s image as a portfolio diversifier.
As evident from the graph below, major altcoins like the BNB, Ripple [XRP], and Solana [SOL] were the most detached from the king coin.
Source: Kaiko
While BNB’s 60-day correlation with BTC plunged from 80% in 2022 to 60% in 2023, XRP tumbled 75% to 45%. On the other hand, Cardano [ADA] and Dogecoin [DOGE] still maintained a strong relationship with the king coin.
Good idea to buy Bitcoin?
When an asset stops reacting strongly to the price action of other similar assets, it makes financial sense to include them in one’s portfolio. Smart investors spread their investments across different cryptos, reducing their exposure to any one type of asset.
How much are 1,10,100 BNBs worth today?
In the current scenario, having Bitcoin in a portfolio may assist in mitigating losses if other cryptocurrencies plunge. Moreover, investors will large holdings of Bitcoin could be tempted not to buy highly correlated assets.
All said and done, the above deductions should not be taken as investment advice. Traders and investors were advised to DYOR.
