In a recent report, research firm Kaiko said that the 60-day rolling correlation between Bitcoin and ETH has fallen below 70% for the first time since early 2021.

What is correlation between assets?

Correlation ranges from -1 to 1. 1 indicates that two assets always move up/down together, -1 indicates that they move in opposite directions, and 0 indicates that they are not related. In this case, a correlation of less than 70% means that the prices of Bitcoin and ETH are no longer as closely correlated as they used to be.

Causes and future?

The correlation drop occurred after the launch of the Bitcoin spot ETF in the US. At the same time, the market is expecting the US Securities and Exchange Commission (SEC) to approve the ETH spot ETF as well.

Kaiko believes that the slow rise in ETH prices shows that the "halo" of the ETF for Bitcoin has not spread to its "sibling". However, ETH still has many other factors that could drive prices higher, such as the development of Layer 2 solutions or the liquid staking mechanism.

ETH ETF: Promising or illusory?

Many experts have given conflicting predictions about the likelihood of the ETH spot ETF being approved this year. While Bloomberg expects up to 70%, JPMorgan is only at 50%. The key lies in the views of the current SEC Chairman, Gary Gensler, who believes that most crypto tokens, except Bitcoin, are securities.

Although ETH prices fell by about 6% in the past week, they are still up 9% year-to-date. Compared to Bitcoin, ETH is showing better storm resistance.

Conclusion:

The relationship between Bitcoin and ETH is changing. Whether the ETH spot ETF is a lifeline remains a tough question. The crypto market is still volatile and unpredictable, requiring investors to closely monitor and carefully consider before making decisions.