Try Quests to earn crypto- Is the price of Algorand more closely correlated with the crypto market, and assets such as BTC or ETH, or is it more correlated with network usage such as number of transactions or ALGO transfers?
- How does this compare to other networks such as Solana?
Note your findings and anything else that may be interesting in relation to Algorand's price movement!
The analysis will start on April 1st and the queries won't be updated automatically. So the report is only a snapshot of the past 3 months.
First of all, let's focus on price correlations using the new ethereum core schema.
Using the ethereum.core.fact_hourly_token_prices table, we can obtain the prices of wrapped solana, wrapped ETH and wrapped BTC.
The next step is to join the algorand price from the algorand.prices_swap table.
The results will be time series line charts and a correlation metric for each pair, estimated in SQL with the built-in function CORR.
For accuracy, the results will be verified with coingecko and coinmarketcap data.
The second part of the report will query the number of transactions on Algorand to evaluate the impact of the network usage on the token price.
Let's start with Solana and ETH/BTC to formulate a hypothesis.
Clearly, SOL follows the same downward trend as ETH and BTC over the past 3 months.
Therefore, it is expected that Algorand will have strong positive price correlation to the rest of the crypto market, specifically assets such as BTC or ETH.
As expected, Algorand proves the initial hypothesis.
The correlation coefficients are identical between SOL/ETH and Algo/ETH, as well as SOL/BTC and Algo/BTC.
These results indicate that there is algorithmic trading in the crypto markets that try to balance out the percentage change across a basket of crypto assets for diversification.
Interestingly, the strongest correlation pairs during that time period were ETH & BTC and Algo & SOL.
Network usage is a complicated topic that deserves its own dashboard.
Briefly, let's visualise the number of daily application transactions and distinct wallets interacting with them.
Lastly, the daily transactions and group transactions are also good graphs to show the state of Algorand.
It is evident that Algorand is slowing down in terms of transactions, impacted by the market conditions.
However, there are still days that 100,000s of new wallets are joining Algorand like the first week of May.
The correlation between the price of Algo and the algorand network exists, but it is much weaker than the initial hypothesis about the general market forces.
Algorand is more closely correlated with the crypto market, and assets such as BTC or ETH, rather than its network statistics.
The bear market cycle affects all of the top crypto assets.