Recent trends in the digital crypto market reveal significant changes in the correlation between the Altcoin Index Total3 and US small-cap stocks (RUT). Since early 2024, their long-term correlation has remained close to 0.75, reflecting combined effects of market liquidity and risk appetite. However, short-term indicators such as 30- and 90-day correlations have recently dropped to their lowest levels, indicating a temporary decline in their relationship. Historically, such periods have been followed by a “mean reversion,” where underperforming assets tend to rebound toward their average levels. This suggests that altcoins, which are generally more diverse and riskier investment projects compared to Bitcoin, may experience price recovery if global economic conditions remain favorable and small-cap stocks continue their growth. The performance of small-cap stocks often mirrors economic growth and investor sentiment, so fluctuations in their correlation with altcoins provide insight into overall market direction. Experts believe that stable financial policies and a steady global economic environment could lead to increases in altcoin prices, while uncertainty may persist in the short term. Investors are advised to adopt cautious strategies by understanding these complex market relationships.
Source: binance
