The Correlation Between Bitcoin and Ethereum Has Disappeared... "Investment Strategy Needs Reassessment"

The correlation between Bitcoin (BTC) and Ethereum (ETH) has decreased, prompting an analysis that Ethereum investment strategies need reassessment.

On the 25th (local time), CryptoQuant analyst Carmelo Alemán reported that "in the past, Bitcoin and Ethereum maintained a strong positive correlation of over 0.7," but "since the 22nd (local time), the correlation has dropped to 0.05, making the two assets essentially unrelated." A positive correlation indicates a tendency for two assets to move in the same direction.

As a result, the reassessment of Ethereum investment strategies was emphasized. He stated, "Investors should no longer expect Ethereum to rise alongside Bitcoin," adding that "Ethereum will move based on its own factors, such as protocol upgrades and the growth of decentralized finance (DeFi)." He further noted, "Ethereum investment strategies based on Bitcoin's rise need reassessment."

Additionally, he predicted that the weakening correlation could negatively impact the Ethereum ecosystem.

He explained, "The biggest side effect of the correlation drop is that Ethereum and related assets may not participate in the bull market," noting that "even as Bitcoin continues to rise, Ethereum and Layer 2 (L2) assets have often remained stagnant or declined."

Furthermore, he added, "If Ethereum fails to align with Bitcoin's upward trend, it could lead to the departure of individual investors and delay mass adoption," warning that "this could negatively affect the entire Ethereum ecosystem."

As of 3:27 PM, on the Binance USDT market, Bitcoin and Ethereum are trading at $107,982 and $2,505, respectively, down 0.23% and 1.76% from 24 hours ago.