33. - Price Status Quo
Does the price of the Sushi token tend to follow the trend of the rest of the market? Does the price follow the trend of the rest of the DEXs? Why or why not might this be?
To compare the price of the Sushi Token to that of the market, we must first define the market. The first, most obvious comparison is to the price of ETH. Since most of the 'market' runs on Ethereum, the price of ETH becomes a pretty good indicator for the overall health of the market. As we can see in the first graph below, the price of Sushi and ETH are loosely correlated. Between May and October 2021, the two graphs are nearly identical. The prices do deviate outside those dates, however, so there must be more to the story.
Next, I tried comparing the Sushi price to that of WBTC. Bitcoin is still the more 'household' name (although that is quickly changing), and therefore another good indicator. As we can see below, the two correlate very closely until October of 2021, the same timeframe that Sushi split from ETH. This points to an event in October causing the prices of ETH and WBTC to skyrocket, while Sushi remained flat. Beyond October, the correlation is still there, but both ETH and WBTC are trending higher than SUSHI.
Sushiswap documentation describes Sushi as a solution to the 'Liquidity Problem.' This problem is largely seen in DeFi, so the next place I turned to compare Sushi to the market is the DeFi pulse index (DPI). This index is made up of the top DeFi products. As we can see below, Sushi price and DPI price correlate very well over the entire year in 2021. In contrast to the previous two graphs, Sushi stayed correlated with DPI into the last quarter of the year. This shows that Sushi tends to follow the DeFi market very closely, but both ETH and WBTC capture market trends beyond just DeFi. Perhaps the deviation could be attributed to the explosion in the NFT markets last year.
The next part of the question asks how Sushi correlates to other DEX's. I chose 4 other DEX's to compare to Sushi as shown below, and all 5 correlate very well. Although there is a difference in price due to popularity of the various protocols, they all see gains and losses in price in very similar fashion. This tells us that DEX prices to tend to follow the same trends. Any deviations to these trends can be attributed to the different goals of the various DEX's.