If you have been in the cryptocurrency market for a long time or are observant of the market trends, then you would have noticed that all crypto charts look the same. There are several reasons it happens, but the most plausible factor is the strong correlation between small coins and top coins, especially bitcoin.
Correlation causes crypto charts to look the same
Every other digital currency or altcoin in the market tends to follow the price actions of bitcoin, which is the first-ever and largest cryptocurrency by market cap. This is because bitcoin holds a significant percentage of the entire crypto market valuation.
Coinmarketcap data shows that bitcoin holds 40% dominance in the crypto market, which is currently valued at $1.032 trillion. Given bitcoin’s market share and dominance, most traders would closely monitor the price while trading other coins as it often serves as an important indicator of the market trends.
This is to say that an increase or decrease in bitcoin would often cause investors to either buy or sell their favorite cryptocurrencies. So, crypto charts look the same because the investors’ buy/sell decisions are, to a small or large extent, influenced by the price action of bitcoin, which is the market leader.
Below are some charts of BTC, ETH, and BNB showing a strong price correlation. The charts look the same when compared to other major altcoins.
A crypto correlation chart from Blockchain Center also provides a clear picture of how major altcoins have strongly mirrored the price of bitcoin since 2021 and the years before. All the crypto charts will likely continue to look the same if bitcoin retains its dominance of the market capitalization.
Regulation and Industry Events
Industry-wide events like regulation could also be one of the reasons crypto charts look the same. The general crypto market is driven by the emotions of the investors. As a result, we often see all the crypto prices crashing or increasing on the report of events perceived to be bearish or bullish.
A typical instance would be China’s crackdown on cryptocurrencies. In late September 2021, the Chinese authorities declared an outright ban on crypto transactions, including mining and investing. Bitcoin, ether, and almost all the crypto charts turned bearish as prices dropped to lower levels.
We also observed a similar trend around May this year, when Terra-Luna collapsed. The incident sprung fear among many crypto investors, which caused massive selling pressure on all the cryptocurrencies.
Real-time data tracking
Another reason all crypto charts look the same is real-time data tracking. The price charts of any crypto would appear the same on Binance and other price tracking platforms like Coinmarketcap, TradingView, etc. because they track the accurate and real-time price feed of the coins.
If it weren’t so, then you would see a lag in the crypto charts on different platforms.