Analysis: The current trend of imitation coins is following Bitcoin, indicating short-term market stability

Odaily reports that CryptoQuant analyst Joao Wedson stated: "Currently, we observe a positive correlation between altcoins and Bitcoin, indicating that these cryptocurrencies have been following the price trend of Bitcoin in recent days. This behavior demonstrates the consistency of the crypto market, with altcoins moving in sync with Bitcoin, reflecting investors' confidence in the overall market.

A noteworthy historical fact is that when the Average Altcoin Correlation tends towards negative values, this has historically been a warning signal for both Bitcoin and the entire market. This negative correlation typically occurs when altcoins significantly outperform Bitcoin, usually before a drop in Bitcoin's price; investors often need to remain cautious at such times.

We can clearly see this phenomenon in January, June and July 2024 where altcoins outperformed Bitcoin. Shortly after this period, there was a 'sell-off' experienced by the market especially for bitcoin.

At present, altcoins like BNT、AXS、LINK、ALGO and ADA have highest correlation with bitcoin. On other hand DASH、CRV、DYDX、BNB and ALICE show lowest level of correlation suggesting their trends are more independent from bitcoin.

However overall all these altcoins still exhibit positive correlations indicating despite individual differences they follow trend of bitcoin. This behaviour reinforces view that current market aligns with trend of bitcoin which could suggest short term stability but also requires continued vigilance to identify potential deviations which may indicate higher risk."