Cardano’s hype driven by exponential price hikes and declining correlations


Cardano, now the eighth largest cryptocurrency on the market, has been one of the best performing cryptocurrencies of 2020, with its value for money putting the tastes of Bitcoin in the shade. In fact, since reaching its lowest price for the year in March, ADA has grown exponentially, surpassing Bitcoin by 200% and the rest of the altcoin market by 250%.

Can Cardano lead the altseason?

Needless to say, the hype associated with Cardano is high. However, with performances like this, it is not surprising that some members of the community have already started to present Cardano as the standard bearer for the next season. This speculation has been motivated not only by ADA’s performance on price charts, but also by its decoupling from Bitcoin in the past few weeks and months.

It is not the first time that the performance of an altcoin has caught the attention of the community. Earlier in the year, when Ethereum jumped between January and February, many quickly noticed the drop in its correlation indices with Bitcoin to advance the proposition that Ethereum would lead the season. A few months later, the brief “decoupling” of Stellar Lumens gave rise to similar conversations.

However, the altseason did not arrive, and if anyone had questions about the impact of Bitcoin on the market, there was no need to look beyond the Black Thursday accident.

This leads to the question – Can Cardano do better?

Exponential rise in prices and fall in correlations

There are good reasons to believe that Cardano may not be entirely hyped. Take a look at the Cardano price tables. Since ADA hit its lowest price in March, crypto has jumped 329%, recording gains of nearly 200% over a year. These are incredible statistics for a cryptocurrency that is now in the top 10.

Source: ADA / USD sur TradingView

In contrast, Bitcoin, the flute player in the cryptocurrency market, rose only 90% on the charts, with gains of 26.54% over a year. It is relevant to note that Bitcoin’s press time trading price of $ 9,117 was only 2% higher than its price of May 5, two months ago. On the contrary, the ADA gained 100% over the same period.

Source: BTC / USD on TradingView

What does this tell us? Well, that tells us that Cardano has been able to support a period of real growth in price charts at a time when Bitcoin, and the largest crypto market, were stagnating. In other words, the prices of ADA and BTC do not change in a corresponding way.

This is supported by the Cardano and Bitcoin correlation index, with the 30-day average for the same falling to -0.2 on the charts, after hitting its annual low in the process. This means that there is a slightly inverse relationship between the prices of the two cryptocurrencies, a finding that supports the argument that Cardano dissociates from Bitcoin.

Many developments

However, what makes the rise in Cardano prices different from the performance of any other cryptocurrency? Well, for starters, such exponential growth is unusual for such a high crypto. Second, at first glance, ADA’s performance does not seem to be motivated by mere speculation or FOMO. It is organic and genuinely development oriented.

Just consider the last days. At the recent Cardano Virtual Summit, the IOHK took a look at the announcements, including 1) the confirmation of the publication of the Shelley code, 2) a corporate fund worth $ 20 million support the adoption of platforms such as Cardano, 3) Project Catalyst – a Voltaire update that gives ADA holders the right to vote on the development of Cardano, and 4) Custody agreement with Coinbase.

These are not even ALL the developments of the past few weeks. With the Shelley rigid fork approaching later this month, other things will happen soon, and if history is an indicator, the price of ADA will be reciprocal.

Cardano, now popular socially

These developments have been reversed by its social volumes and its social domination as well, a sign of growing interest in the Cardano ecosystem. According to a recent tweet from crypto-analytics company Santiment,

“Cardano’s social media jumped after the pump on July 1. Mentions of $ ADA and #Cardano on crypto social networks soared to a 30-day high after the coin climbed to + 11% (currently ~ $ 0.094) to start the month. ”

Like the price, social media, and social dominance of ADA are expected to increase over the next month, with the IOHK lining up more and more developments and announcements.

All of these points suggest that not only could ADA see more price increases in the short term, but that its decoupling from Bitcoin could also generate more steam.

But is it possible? Can a cryptocurrency, any cryptocurrency, really decouple from Bitcoin?

Bitcoin is still the king

At the time of writing, bitcoin had a market capitalization of more than $ 167 billion, or more than 64.2% market share. In addition, the bulk of the market’s trading volume is made up of trading pairs linked to Bitcoin or one of the many stable coins on the market that are often used by users as ramps to Bitcoin.

Just look at Binance, one of the best crypto exchanges in the world. At the time of writing, with a 24-hour trading volume of almost $ 3 billion, all of Binance’s top 15 trading pairs had Bitcoin or USDT.

That’s not all. Bitcoin is not only the largest cryptocurrency in the world, it is also the most popular, the most important. Talk to a stranger and if he has heard of cryptocurrencies, he might know what Bitcoin is. But chances are he doesn’t know what Cardano or any other altcoin is.

In terms of consumer adoption and recognition, Bitcoin is still synonymous with cryptocurrencies and vice versa. Until that changes, Bitcoin will continue to rank high enough.

This type of dominance is overwhelming, which is why Bitcoin, despite its recent pricing difficulties, will continue to have a huge impact on the largest crypto market and its altcoins, including Cardano. ADA could disassociate from Bitcoin for some time, but it is unlikely that a lasting disruption of the impact of the price of Bitcoin on the market will occur. That being said, the answer to this question will be clearer in six months after the passage of numerous Cardano announcements.

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