On August 17, an altcoin bull market “playbook” created by a popular Bitcoin trader is going viral. The trader known on Twitter as “Hsaka” created the correlation matrix, which is designed to help identify altcoins that may be ready to rise.
The chart displays all of the coins on Binance Futures and includes their levels of price correlation with one another over the past 14 days. Scores closer to 1 indicate that the prices of each two assets tend to move as a cluster, while scores closer to -1 indicate an inverse relationship between them. Scores around 0 indicate a lack of correlation.
Hsaka’s post, along with his message calling the chart the “playbook to trade this alt cycle”, quickly got the attention of many in the crypto community. Analyst Luke Martin, the head of Venture Coinist, calls it one of the most useful charts tools in the current market climate.
The chart displays some interesting pairings. Bitcoin’s most correlated asset, for example, is Zcash, while Ethereum’s is XRP. COMP, the Ethereum governance token for decentralized finance (DeFi) lending platform Compound, appears to be least correlated asset, with mostly negative correlations to other coins.
In general, cryptocurrencies tend to show high levels of correlation, and Ethereum was the most correlated asset in 2019, according to Binance Research. ETH and Bitcoin, the top two cryptos by market cap, have typically demonstrated relatively strong levels of correlation. Hsaka’s chart reports their recent two-week score is 0.66, indicating a relatively strong level of positive correlation.
Hsaka did point out one strong exception to the crypto correlation trend: coins on the decentralized protocol Uniswap.
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