It goes without saying that correlation is not the same as causality. And with some correlations, it can be even harder to figure out especially if you have no clue as to what is triggering the “causality” behind the correlation.

Yet, when we see a correlation, it’s hard to ignore, particularly when a correlate seems to “lead” something else that we are watching closely. And this, according to an article in Forbes by Clem Chambers, is what’s happening between Litecoin, Ethereum, and Bitcoin; that the two former altcoins are leading the latter.


correlation-1-300x197 Are Litecoin and Ethereum Leading Indicators for Bitcoin?

Bitcoin, Litecoin and Ethereum prices: April 2017 to July 2018CREDIT: ADVFN


As we can see, Etherum and Litecoin HODLers who were able to get in early may have seen greater gains than those who had purchased Bitcoin, perhaps even after all three cryptos crashed.

And although we can see that ETH and LTC appears to have “led” the BTC surge, ETH was the last to have fallen once the BTC and LTC plunge was well underway.

Chambers also cites more recent price activity and on a smaller scale as shown below:

correlation-2-300x197 Are Litecoin and Ethereum Leading Indicators for Bitcoin?

Bitcoin, Litecoin and Ethereum prices: February to July 2018CREDIT: ADVFN


Again, the question of the reliability of correlation appears. We can all see, as Chambers does, that the prices are correlated. But is this enough to assume that ETH and LTC prices are leading indicators of BTC?

It’s tricky, as the correlation is there, but the fundamental reason behind this lead is unclear, and Chambers says very little in the way of addressing them. Yet, now that you are aware of this correlation, and if you are looking to buy BTC, it’s hard to avoid it.


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