Better than Bitcoin: Binance Coin (BNB) beats BTC in the race for the “Best Investment 2019” title

One of the reasons why Bitcoin is referred to as “digital gold” is that it can boast an impressive and relatively stable upward trend every year. However, there’s a lot to be said about a utility token like Binance Coin (BNB), which outperformed the largest cryptocurrency by over 40 percent at the end of last year.

In a 2019 annual report, Binance shows that BNB achieved the best performance among the ten largest cryptocurrency investments by market capitalization in 2019 , growing 128 percent. Bitcoin was the second best investment with an 87 percent increase.

Sure: Binance is of course very interested in making the in-house token look good. However, this information was already readily available and, interestingly, the report from the Maltese cryptocurrency exchange shows the correlations between cryptocurrencies across the market.

The overall result is that the major cryptocurrencies have high correlations with each other – and that means that the cryptocurrencies tend to move together as the market shifts.

BNB with a clear lead 

Interestingly, in 2019 only four of the top ten cryptocurrencies saw gains. In addition to Bitcoin and BNB, Litecoin (LTC) grew by 29 percent and Bitcoin Cash (BCH) by 24 percent. Even more – all of those who were green at the end of the year had no positive results in the first and second quarters as the entire second half of the year was red for the top 10 currencies.

Outside of the top 10 and top 19, there were a few other cryptocurrencies that could outperform Bitcoin’s profits – especially Tezos, Huobi Token, and Chainlink. Bitcoin’s market dominance, however, rose significantly, from 52 percent to 68 percent – just one percent from the annual high of 69 percent in September.

How are cryptocurrencies related?

It is easy to observe for the layman that the cryptocurrency market generally moves like a single market and is mostly led by Bitcoin at the top. When Bitcoin suddenly rises in price, the underlying coins often follow, which shows a strong correlation.

In fact, there were no signs of negative correlations for large-cap cryptocurrencies. Tezos (XTZ) had the lowest correlation value with a correlation coefficient of only 0.3 on a scale from -1 to +1.

The coin most correlated with BNB was Ethereum. ETH held this place all year round with an average correlation coefficient of 0.69. Programmable blockchains such as Ethereum, EOS and NEO also showed higher median correlations with each other than alternative systems.

Binance concludes that there are a number of idiosyncratic factors involved in the correlations, such as the cluster of programmable blockchains and the existence of the so-called “Binance effect”.