As per data from IntoTheBlock, Cardano [ADA] demonstrates a notable correlation with Avalanche [AVAX] and Polygon [MATIC] when compared to other leading cryptocurrencies.
Currently, the correlation between ADA and AVAX stands at 0.99, while it is 0.98 for MATIC over a 60-day period. The correlation coefficient ranges from -1 to +1, with values closer to +1 indicating a strong directional movement. At the time of writing, ADA was priced at $0.45, reflecting a 26.40% YTD decrease.
A Triad Facing Challenges
AVAX was valued at $36.94, marking an 11.73% decline in the same timeframe. On the other hand, MATIC was trading at $0.71, showing a 29.21% decrease.
To assess whether Cardano would continue mirroring the trajectory of AVAX and MATIC, CryptoCrypto examined the market sentiment surrounding these projects.
Santiment’s Weighted Sentiment metric indicated readings of -1.613 for ADA, -1.018 for AVAX, and -1.544 for MATIC.
Weighted Sentiment reflects the level of social engagement, with a positive metric suggesting bullish sentiment and potential asset demand increase. Conversely, negative readings, as observed for all three in this case, signify lowered confidence and potential price declines for ADA, AVAX, and MATIC.
However, amidst negative sentiment, there might be an opportunity for accumulation before a potential upswing emerges.
Potential Return to Bullish Momentum for the Tokens
Further analysis using the Market Value to Realize Value (MVRV) ratio can help determine whether a cryptocurrency is undervalued.
Increasing MVRV ratios indicate higher profits for holders, potentially leading to increased selling, while decreasing ratios suggest holders moving towards unrealized losses and holding onto assets. Currently, Cardano’s 30-day MVRV stands at -5.313%, indicating potential unrealized losses for recent accumulators.
For MATIC, the metric reads 1.608%, suggesting a contrasting outlook. Yet, the decreasing ratios indicate undervaluation during the bullish market phase.
Should prices begin to recover, ADA might rally to $0.67, AVAX could target $50.35, and MATIC’s resurgence might push it towards $1.06.