Gray Report: Bitcoin's Dominance Wanes, Correlation Between
Grayscale released a research report on November 12, stating that over the past three years, Bitcoin price changes could explain only about 50% of the return differences across crypto market sectors; Bitcoin's realized volatility over the past year was about 43%, the payments sector 49%, and the AI sector 85%. Correlations across sectors have fallen from previous highs, but Grayscale emphasizes that declining correlation does not equal lower risk.
Event Timeline
- [11-13 00:27] Grayscale: The crypto market is gradually moving away from Bitcoin dominance, and return correlations across sectors continue to decline (Wu Says)
- [11-13 00:40] Crypto sector correlations fall from highs; Grayscale says Bitcoin explains only about 50% of return differences (Odaily Planet Daily)
Background and Impact
Grayscale released a research report on November 12, which was reported separately by Wu Says and Odaily Planet Daily on November 13. The core judgment of the report is: over the past three years, Bitcoin price changes could explain only about 50% of the return differences across crypto market sectors, while the remaining variation is more affected by sector-specific and specific-asset factors. In other words, Bitcoin's rise and fall is no longer the only variable explaining the performance of other sectors.
The volatility comparison given in the report shows that Bitcoin's realized volatility over the past year was about 43%, the annualized volatility of the cryptocurrency payments sector was 49%, and the AI sector was as high as 85%. Grayscale also noted that correlations among crypto sectors have fallen from previous highs, and market performance is gradually diverging. The two sources are fully consistent on the figures of about 50%, 43%, 49%, and 85%, and on the statement that "correlation has fallen from highs"; there is no conflict in definitions. Both reports mention that the content originates from Cryptobriefing.
From an interpretive perspective, Grayscale's conclusion has two sides. On one hand, it believes that as the crypto market matures, investors may obtain more diversified sources of returns through different sectors and asset allocation, and the component driven by sectors' own narratives and fundamentals is rising. On the other hand, Grayscale explicitly warns that declining correlation does not mean lower investment risk—the AI sector's 85% annualized volatility is itself higher than Bitcoin's 43%, and intra-sector divergence may bring more severe single-asset volatility. For ordinary investors, whether they are accustomed to following market conditions through channels such as Sesame Gate.io app registration/download and Bitget app registration/download, or using entrances such as Binance app registration/download, OKX app registration/download, and HTX app registration/download to view asset distribution, they need to note that "declining correlation" and "declining risk" are not the same thing.
It should be noted that both sources' reports are paraphrases of the same Grayscale report and do not disclose the specific criteria for sector classification, the scope of sample assets, or the calculation method for the correlation indicator. The report's statement that "Bitcoin explains about 50% of return differences" is based on an observation period of the past three years and is retrospective statistics; the reports do not provide predicted values for future correlation.
Frequently Asked Questions
### Does declining correlation mean allocating across different sectors can effectively diversify risk?
Grayscale explicitly warns in the report that declining correlation does not mean lower investment risk. While co-movement between sectors weakens, volatility within a single sector may be higher; for example, the AI sector's annualized volatility reaches 85%, higher than Bitcoin's 43%.
### What does the AI sector's 85% volatility mean for readers?
This figure is the annualized volatility of the AI sector given in the Grayscale report, used for comparison with Bitcoin's realized volatility of about 43% over the past year and the payments sector's annualized volatility of 49%, indicating that risk levels differ markedly across sectors.
### What other information is worth watching going forward?
Existing reports do not disclose the criteria for sector classification, sample scope, or correlation calculation method, nor do they provide predicted values for future correlation. Going forward, it is worth watching whether Grayscale publishes the full report and more granular sector data.