Bitcoin Forum

Hi folks.
I wanted to raise this quick question: while BTC and ETH are powered by the principle of distributed ledgers and cryptography, the two differ in many technical ways and they also differ in purpose. Bitcoin is a so-called currency, while Ethereum is developed as a platform which facilitates P2P contracts and applications via its own currency vehicle. The primary purpose of ETH is not to be a payment solution (to my knowledge).
I sold almost all my BTC, my portfolio is now 80% ETH and it annoys me a little to see how ETH struggles to gain value whenever bitcoin's price drops (actually I am exaggerating a little, since January 1st ETH is doing alright compared to BTC but still you get my point).

Any opinion welcome.
Thanks.  

This isn't any special correlation between Bitcoin and Ethereum, there is a certain correlation between the whole cryptomarket.
Primarily other cryptos follow Bitcoin in it's general price direction, but not the other way around.

This is simply because price is not determined by technology in the short term, but by opinions of average people who know nothing about cryptocurrencies.
Everyone knows Bitcoin is the main cryptocurrency here, so when it falls, people get out of the whole cryptospace, when it rises, people look into other cryptocurrencies as well. When you see price movement of some altcoin, you know that it is just small part of the whole market, so you don't react the same for the other cryptocurrencies.

You have to see this from the perspectives of someone who doesn't know anything about cryptocurrencies. They control the price.
If price was set by people who knew about how cryptocurrencies work, the value would only increase at an exponential rate.

Only Tether has so far moved the opposite direction in terms of bitcoin correlation, all other cryptocurrencies are basically pegged to the bitcoin market. So if bitcoin crashes, they all do.

Well actually, I didn't get you're point actually. Though I agreed they are differ to one another that's true, How ever in terms of value they have big difference  in that. Because bitcoin in terms of features they are not the same especially in sending money in every countries. While Ethereum for now was being used most often in the ico project as way of payment of the token project.

Hey man, just my two cents. It’s true, BTC and ETH seem to move in tandem sometimes. Which at first seems contradictory, if you consider that both work very differently, as you pointed out, and should satisfy different needs or attract different investors. But these are not the indicators that you should be looking at when it comes to market fluctuations. One relevant indicator is the impact that important stakeholders' actions may have on prices.

So, for example on 16 January 2018 the market heavily tanked. Shortly before, the South Korean Finance Minister repeated warnings in an interview, that his government was considering a ban on cryptocurrency trading. Why would this suggestion by one single country affect the market in such a major way, one might ask? The reason is that South Korea is a major trading hub for cryptocurrency. It’s number 3 for Bitcoin trading and the largest exchange market for Ether, accounting for more than one third of its market share. Harsher restrictions here could put an end to the current crypto boom everywhere. As I understand it, this decision affected the market, as investors feared for the long-term prospects of their respective coins and sold en masse. As a result, both ETH and BTC tanked simultaneously - not because of some inherent relationship between the two, but simply because they are governed by the same laws and regulations.

There are other instances where you can see the direct impact of what governments or other organizations say or do on prices. For example on 14 September 2017, China clamps down on Bitcoin - price drops by $500 for BTC; by $50 for Ether. The effects on the pair aren't necessarily positively correlated, though. Consider the SECs refusal to list a Bitcoin-tied exchange-traded fund on 10 march 2017. In the weeks after, ETH soared, while BTC slightly lost in value. I’m just guessing here, but I’m sure establishing the fund would have cemented BTCs dominant position. Since it didn’t happen, the final vote on who will be #1 is still out. So, the assumed relation between both coins is not a matter of course.

One final reason why these two independent currencies seem to be interlinked, might have a wholly irrational cause. It might simply be the case that people believe BTC and ETH to be closely linked, as they are the two major coins. This way, seeing Coin A drop and excepting Coin B to drop, as well, may lead to investors selling Coin B to minimize/prevent losses, in turn leading Coin B to lose value, making it a self-fulfilling prophecy.

So, in my opinion the correlation between the prices is the result of the combined effects of regulation and gut response to developments on the crypto market.

bcz bitcoin is the 1st digital currency, this makes it best known. then Ethereum also popular and it a 2nd popularity rank after bitcoin. so, that both occupy the 2 top points in crypto currency market. Both rely on blockchain technology and can make global transaction without any restrictions. Ethereum will not appear and survive without bitcoin so that both complement each other in digital ecosystem. I think that's one of the reason why bitcoin and ethereum prices are related.

Its only about trust. While bitcoin come to this world to bring the better payment systems for all of us for free. And another altcoin is just a new company with the purpose to gain the profit. Correlation between ETH and BTC its only about the trust of the people.

I feel it is due to most of trades happening in BTC pairs. Consider the example of BTC at 10K and ETH at 1K. The price of ETH would be 0.1 BTC, but when BTC goes down to 8K, each ETH gets you 0.125 BTC. Most people in crypto feel that is a good deal and use the opputunity to get more BTC. But what it invalirably starts is a frenzy of people selling, which mostly ends up in a selling spree of ETH and more often than not it brings the price of ETH lesser than before. This applies for all the alts and during each price fluctuation barring few all the alts follow the trend.

Am I understand right - that now all exchanges do not work with USD but only with tether?

Bitcoin is the king of the crypto market, so the value of Bitcoin represents the level of community interest in this special market.
Bitcoin currently accounts for 40% of the market capitalization and is a major player in the large fluctuations, such as the laws and regulations of the countries. This makes Bitcoin the first, and most important, determinant of token price of overall market.

One might say, "When Bitcoin sneezes, the altcoin market catches a cold."

Not just between bitcoin and ethereum. It's between bitcoin and all other coins. The only reason I can think of is because of bitcoin having the most users base and a significant portion of users only exchange between bitcoin and other coins, not with USD.

For now bitcoin still the first and the second is ethereum. Bitcoin leader in the market right now, bitcoin price will rise and shine this year.
ETH now the value high and fast grow like bitcoin. Many investors do invest in this two coins and also me, because I get more profit from this 2 coins.

Are you pertaining to the whales? According to your claim, these people that doesn't know anything about cryptocurrency are likely to be the troublesome people, I presume. And those people with legit knowledge about cryptocurrency would likely make the value increase in an exponential rate. So, here's a question: Is cryptocurrency decentralized anymore?

Or how about proofs to your claim.

'cause I'm also holding eth for I perceive a potential on this coin that soon it's value will pump higher like bitcoin does.

I'm still sure ethereum will eventually take the top spot in the crypto market and the eth btc flippening will happen.

they are the most used currencies in cryptolandia and also the fuel on the exchanges, the correlation exists in therms of number of transactions, they do not have the same number of transaction but make the game of the global transaction graphic. with bitcoin or ethereum you buy most of the coins and tokens on the exchanges so the fluctuation is similar and derivates from the general trend of the cryptomarket