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Crypto analyst Joao Wedson believes the current crypto market health is closely tied to the relationship between Bitcoin and altcoins. When altcoins follow Bitcoin’s trends, it suggests a strong belief in the overall market’s stability.
Wedson pointed to historical instances when a deviation in the altcoin-Bitcoin correlation preceded a wholesale decline in crypto prices. He noted Bitcoin and other cryptocurrencies declined in January, June, and July 2024 after a deviation in the trend pattern between altcoins and Bitcoin.
Meanwhile, Wedson explained that altcoins outperforming Bitcoin trigger deviations in the correlation between the crypto categories. According to him, investors consider such negative correlations a warning sign for BTC, which could trigger an overall decline in the crypto market, as seen in the past.
Bitcoin has pulled back this week, losing nearly all the gains from last week. The price dropped from a $64.502 high on Monday to a $57,866 low on Wednesday before rebounding slightly by Thursday morning to trade for $59,695 at the time of writing, according to data from TradingView.
Solana, one of the best-performing altcoins of 2024, mirrored Bitcoin’s behavior, pulling back from last week’s rally and losing nearly all the gains it made. SOL’s price dropped from a $162.36 high, which it achieved last week, reaching a $140.55 low on Wednesday before rebounding slightly to trade for $144.88 at the time of writing.
In the meantime, Wedson observed altcoins like BNT, AXS, LINK, ALGO, and ADA have the highest correlation with Bitcoin. Meanwhile, DASH, CRV, DYDX, BNB, and ALICE displayed the lowest correlation levels. Despite individual variations, the overall trend indicates that altcoins generally follow Bitcoin’s lead, suggesting a healthy and stable crypto market.
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