Try Quests to earn SOLAlgorand - Algorand Price Correlation
Q109. 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!
In this dashboard, we are going to study the correlation between ALGO and some other factors.
- At first we will look into correlation between ALGO price and the price of BTC and ETH.
- After that we will examine the correlation between ALGO price and network usage data such as transaction count, ALGO transfers and stable coin transfers in Algorand network.
- Finally, we will do the same examination with Solana blockchain, and compare the results.
We get most of the required data from the ethereum.core.fact_hourly_token_prices table, to fetch the ALGO prices we need to access the flipside_prod_db.algorand.prices_swap table.
To have a consistent result between, we use data from January 21, 2022. This is the first date that SOL has a price in fact_hourly_token_prices table.
Finally, to obtain the correlation between A and B, we use the aggregation function corr(A, B).
corr(A, B) gives a result between 1 to -1:
- 1 indicates a strong positive relationship.
- -1 indicates a strong negative relationship.
- 0 indicates no relationship at all.
On the following charts, the price of ALGO, BTC and ETH can be seen. In the next section we are going to study the correlation between these prices.
By looking at the correlation result coming from corr aggregate function, It can be seen that correlation between ALGO and BTC is 0.879 and correlation between ALGO and ETH is 0.864.
As mentioned earlier, these numbers indicate an strong correlation between these parameters.
On the following chart, the amount of daily transactions, daily ALGO transfer and daily stablecoin transfer can be seen. In the next section we are going to study the correlation between these parameters and ALGO price.
By looking at the correlation result coming from corr aggregate function, It can be seen that correlation between ALGO price and Transaction count is 0.293 and correlation between ALGO price and ALGO transfer count is 0.269, also the correlation between ALGO price and stable coin transfer is -0.371.
These numbers indicate almost none or a very small relationship between price of ALGO and network usage parameters.
In the next section Solana network will be studied.
Earlier the chart for BTC and ETH was shown, in this section we are going to study the correlation between SOL price and the price of BTC and ETH.
It can be seen that SOL has an even higher correlation than ALGO had with BTC and ETH.
The correlation between SOL and BTC is 0.93 and correlation between SOL and ETH is 0.95. This indicates a very strong correlation between these tokens prices.
On the following chart, the amount of daily transactions, daily SOL transfer and daily stablecoin transfer can be seen.
By observing the following results, it can be seen that both the number of transactions and stable coin transfer, correlation with the price of SOL is about 0, which indicates the lack of correlation between these parameters and the price of SOL.
But interestingly, SOL transfer count correlation with its price is about 0.45, this number can indicate some correlation between these parameters.
Let's summarize the collected information:
- Both ALGO and SOL have strong correlation with BTC and ETH price.
- In SOL case, the correlation is even stronger, which indicates similar price action with BTC and ETH.
- Network usage parameters show no sign of correlation to their network's token.
- Although Network usage has shown no correlation with their network's token, but SOL had a slight correlation with the number of SOL transferred per day.