- The correlation coefficients respectively indicate almost parallel market movements.
- Data from the chain suggested that holders should anticipate further gains in the future.
According to IntoTheBlock, Cardano [ADA] has a stronger correlation with Avalanche [AVAX] and Polygon [MATIC] than any other top cryptocurrencies.
At the time of writing, the correlation between ADA and AVAX was 0.99. For MATIC this was 0.98 on a 60-day basis. Values of the correlation coefficient range from -1 to +1, with the former implying significant divergence.
On the other hand: a reading close to +1 indicates a strong directional move, which was the case with Cardano and the other two. At the time of writing, ADA’s price was $0.45, which was down 26.40% on a Year-To-Date (YTD) basis.
Source: IntoTheBlock
A threesome in deep waters
For AVAX, the value was $36.94 – a decrease of 11.73% within the same period. Finally, MATIC changed hands at $0.71, down 29.21%.
To determine whether Cardano would continue in the same direction as AVAX and MATIC, AMBCrypto looked at the sentiment surrounding the projects.
A look at Santiment’s Weighted Sentiment metric shows that the value was -1.613 for ADA. In the case of AVAX, the value was -1.018, while that of MATIC was -1.544.
Weighted sentiment shows the unique social volume, measured by comments about an asset. If the measure is positive, it means that market participants are optimistic and that demand for the assets in question could increase.
However, as the outcome was negative for all three, this indicates low confidence in the potential. With this trend, there is a chance that the prices of ADA, AVAX and MATIC will drop again.
Source: Santiment
At the same time, a very negative sentiment of this nature could indicate a good period to accumulate before a big rise occurs.
The tokens may soon return to the bull phase
But to confirm that, we need to analyze the ratio of market value to realized value (MVRV). This metric indicates whether a cryptocurrency is undervalued or otherwise.
The more the MVRV ratio rises, the more profit holders have and the more they are willing to sell. On the other hand: a decrease in the measure suggests that more holders are suffering unrealized losses.
In this case, most will opt for HODL. At the time of writing, Cardano’s 30-day MVRV ratio was -5.313%. This means that if every ADA holder who has accumulated over the past 30 days were to sell, they would make an unrealized loss.
In the case of MATIC, the benchmark was 1.608%. But one thing AMBCrypto noticed was that the ratios decreased. Therefore, one can assume that the tokens were undervalued in the context of the bull market.
Source: Santiment
Realistic or not, here is AVAX’s market cap in ADA terms
Should prices start to recover, ADA could recover to $0.67. If it is the same for AVAX, the token could make a move towards $50.35.
Moreover, a rebound for MATIC could send the price towards $1.06.