The correlation between bitcoin and ether prices fell below 80% for the first time since November 2021, indicating a significant shift in the relationship between the two largest cryptocurrencies.

The rolling 30-day correlation between bitcoin and ether dipped to about 78% this week, according to data provider Kaiko. Correlation measures how closely the prices of two assets move together. When the correlation is low, it means their prices are moving in different directions more often.

In other words, the falling correlation means that BTC and ETH prices are not moving together as closely as they used to. 

Bitcoin-ether correlation falling

Last month, Coinbase analyzed the correlation between BTC and ETH returns. The exchange concluded that it has been falling since mid-to-late March as bitcoin began to outperform other cryptocurrencies against the backdrop of U.S. banking sector turmoil and heightened regulatory scrutiny on non-bitcoin cryptocurrencies.

"But the decline of that relationship has become more pronounced in the days following the Shanghai (Shapella) fork, reminiscent of a similar trend observed in September 2022 during the Merge (when Ethereum changed its consensus mechanism to proof-of-stake)," Coinbase said at the time.

Theoretically, a falling correlation between two assets reinforces the case for diversification by including both assets in an investment portfolio.

Bitcoin and ether prices are up around 62% and 50% so far in 2023, respectively, according to The Block's Data Dashboard.