What Caused the Sudden Rally in NEO, LTC, XRP, ZEC, EOS, and MIOTA
Several cryptocurrencies saw a massive crash in price in February, which continued until mid-March. Many cryptos with a small market cap made all-time lows as well. However, from mid-March, the prices have been recovering significantly. Coins like Bitcoin and Ethereum shot 150% north, while others were up about 100% from recent lows. That said, the rally in cryptocurrency prices lasted until the start of May. From May to the present date, almost every cryptocurrency has been consolidating and moving sideways.
Over several months, cryptos such as NEO, LTC, XRP, ZEC, EOS, MIOTA, etc. are performing with high correlation. They do not move the same on an hourly basis but do on a daily and weekly basis.
The volatility in the cryptocurrencies mentioned above has been quite feeble over the 10 days. Coming into the second week of July, on 6th, each of these cryptos rallied about 6%. Few went up as high as 8.5% on the same trading day.
Correlation Coefficient in Cryptocurrencies
The correlation coefficient is a measure between -1 and +1 that determines the linear independencies of two cryptocurrencies. Positively correlated coins tend to move together, while negatively correlated cryptos move inverse to each other.
According to the Pearson correlation coefficient, a positive value indicates a positive correlation, and a negative value indicates a negative correlation between the two cryptocurrencies.
The below illustration represents the correlation coefficients in NEO, LTC, XRP, ZEC, and EOS. It can be ascertained that there is a positive correlation in every cryptocurrency pair. In other words, these cryptos have been moving in the same direction in a period of 7 days.
Below is the chart of NEO/USD on the Daily time frame. The overall trend of the market is upward and has been moving horizontally from the beginning of May.
The price of 9.57 represents the potential support area (buyer’s zone). In the first week of June, the price reacted off from the support and made a high to 13.00. Later, the price shot down to the same support level. And on 6th July, the market rallied 5% from the support.
Looking at the present market, the price is continuing its rally, indicating the power of the support area. In the coming trading sessions, the NEO price could reach 11.83 or touch 12.00
Below is the price chart of LTC/USD on the Daily time frame. Though the overall trend of the market is down, the price has been rallying since mid-March.
Level 41.19 represents the support zone. In mid-May, the market held at the support and rallied almost up to 50.00. The price then entered into a range, where it again came down to the support level. And on 6th July, the price reacted from the support and shot north. Presently, the upwards rally is still intact.
In the near-term, LTC could yet again reach the top of the range (47.69). Moreover, if the correlation continues to stay positive, the pair could reach levels of 50 as well.
In the below chart of XRP against the US Dollar on the Daily time frame. The overall trajectory of the market is up, but the price is moving sideways from May.
The price 0.17590 is acting as major support as the market reacted strongly with a tail in the bottom on 10th May. The price dropped to the same level in July, and the buyers took charge of the market on 6th July, where the prices spiked 6.87% in 24 hours.
As we speak, the prices are up 10% from the previous day’s close. This clearly signifies the strength of the support level. Considering the same, XRP/USD price is expected to reach 0.21049 within a few trading sessions.
Comparison Price Chart
Below are the price charts of LTC, NEO, XRP, EOS, ZEC, and IOTA in the comparison format. It is evident that all the markets are going together.
Before 6th July, it can be observed that every market was held at the support (black ray). And on 6th July, all the cryptocurrencies made a move to the north.
After this up-move, the correlation in prices is still intact. On 6th July, the market pulled down, and the following day every market continued the uptrend.
The correlation in cryptocurrencies is one of the primary factors that determine the movement in prices. Like the rally that occurred on 6th July, there have been several other instances where there have been significant and identical price actions.
- $51 + 2.4%
- $51 + 2.4%