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The price of the world's largest digital asset is down nearly 40% so far this year, extending declines amid the recent crypto market rout. But market observers say that bitcoin is holding up better than the rest.
Why it matters: Bitcoin has been moving in tandem with other crypto as well as stocks lately, begging the question of what role it should play in investors' portfolios.
Bitcoin's correlation with an index of digital assets (excluding stablecoins and of course, bitcoin) hit highs earlier this year at levels unseen since early 2020, according to Noelle Acheson, head of market insights at Genesis.
The intrigue: That correlation between bitcoin and other crypto dropped sharply the week of May 11.
What's happening: Bitcoin is the main character in crypto in times of uncertainty.
Yes, but: The bitcoin dominance metric requires historical context, says David Lawant, head of research at Bitwise Asset Management, among the largest crypto asset managers.
"The biggest story in crypto over the last couple of years is the breadth of different applications that blossomed to the mainstream beyond bitcoin's digital gold," Lawant tells Axios.
Over the long term, diversification across crypto could be key, Lawant says.
Meanwhile, crypto natives look for institutional washout.
The bottom line: Crypto market experts expect correlations to drop across risk assets after the dust settles — when that happens is uncertain.
