Correlation is a statistical measure of the relationship between two variables. In financial analysis, it helps determine whether two assets tend to move in the same direction (positive correlation), in opposite directions (negative correlation), or independently (near zero).
Historically, Bitcoin and Ethereum have maintained a strong positive correlation, typically above 0.7, indicating that most of Bitcoin’s movements were mirrored by Ethereum, reinforcing their tight connection over time.
Since early January, however, a decoupling has occurred, as shown by the BTC-Alts Correlation Matrix (Yearly). On January 1st, the correlation was 0.63, dropping steadily to 0.05 by May 22, 2025, signaling a major divergence.
What does this mean? This shift breaks one of the crypto market’s most consistent patterns, prompting a reevaluation of strategies based on Bitcoin-Ethereum alignment. It also adds uncertainty for investors, who can no longer expect ETH to follow BTC. Portfolio models, risk strategies, and return forecasts must now adapt. This may also reflect how Ethereum is becoming driven by its own internal factors—like protocol upgrades, regulation, or DeFi—indicating growing independence.
One effect of this divergence: Ether and related assets risk missing out on bull markets. This is evident in 2025—Bitcoin has climbed, while Ethereum has often stalled or declined, along with L2s like Optimism (OP), Polygon (POL), zkSync, Starknet (STRK), and Arbitrum (ARB).
Conclusion: This break could be harmful not only to ETH investors, but also to the overall Ethereum ecosystem. As the second-largest crypto, Ethereum’s failure to meet expectations may discourage retail investors and delay mass adoption.
Written by Carmelo Alemán, Verified On-Chain Analyst at Cryptoquant
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Written by Carmelo_Alemán
