It’s starting to look like a good week for the cryptocurrency scene, as Bitcoin was up by 7.5% on Monday, August 9th. Consequently, Coinbase Global Inc. also started the week well, as it was up by 8%.

It’s a trend that has been occurring over the past several weeks. Investors look to Bitcoin over the weekend to see how coinbase performs on the Nasdaq at the start of the week.

According to BTIG managing director and fintech analyst Mark Palmer, coinbase has almost always had a strong correlation with Bitcoin – and that correlation has been hitting 0.88 for the past couple of months.

“We’ve seen strong correlations between Bitcoin and some of Coinbase’s key metrics,” he says. 

Palmer also stated that it’s a rough proxy, showing investors how different cryptocurrency is from conventional stocks and bonds. Unlike traditional trading, which runs between Monday and Friday and only during business hours, cryptocurrencies like Bitcoin trade 24/7. Few other assets have this level of flexibility or availability.

For his part, Jerry Braakman, chief information officer at Santa Ana, CA’s First American Trust, thinks that anything that happens in the cryptocurrency sector is bound to impact Coinbase’s performance. Braakman says that the market is effective when it comes to correlating the two. It can arbitrage any differences between the two to get a good opening price every Monday as trading begins.

Market watchers who have been monitoring Coinbase’s progress since it debuted in April of this year are not surprised at the correlation. However, Braakman is quick to point out that it makes perfect sense that it is natural for Coinbase to be correlated in price to both Bitcoin and its rival Ethereum.

“Those two are where the majority of asset-value is [when it comes to cryptocurrencies,]” he explains. “[When it comes to Coinbase, its] business model is basically leveraging the value for revenue.

But BTIG’s Palmer has a caveat for potential investors: Coinbase’s dependency on Bitcoin as one of its key revenue sources has declined over the past couple of years. Last year, the token represented around 44% of Coinbase’s transaction revenues – a substantial decrease from the 60% it earned back in 2019. In which case, Palmer thinks that the correlation is starting to recede.

Palmer further added that Coinbase has been ramping up when it comes to diversifying its platform, as the exchange has been expanding its reach by adding other tokens.