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!

    Introduction

    In this, we aim to investigate the correlation of the ALGO price with the state of the crypto market, including the price of Bitcoin and Ethereum. We also examine the relationship between the price of the ALGO and the number of transactions on its blockchain, and the volume of ALGO that is transferred. Finally, about the mentioned cases, we will analyze two blockchains, Algorand and Solana.

    Methodology

    In this analysis, we drew the following charts using Flipsidecrypto data and we will discuss them further.

    • Correlation of ALGO Price and BTC Price

    • Correlation of ALGO Price and ETH Price

    • Correlation of ALGO Price and Amount of Transferred ALGO

    • Correlation of ALGO Price and Number of Transactions on ALGORAND Blockchain

    • ALGO Vs SOL Price

    • Correlation of SOL Price and BTC Price

    • Correlation of SOL Price and ETH Price

    • Correlation of Sol Price and Amount of Transferred Sol

    • Correlation of Sol Price and Number of Transactions on Solana Blockchain

      Analysis

    At first, using the swap data in Table ‘algorand.prices_swap‘, we get ALGO price, and also using Table ‘ethereum.core.fact_hourly_token_prices‘, we get Bitcoin daily price.

    You can see their trend below.

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    The chart shows the correlation between Bitcoin price and ALGO price. As you can see, their correlation is positive so with the increase or decrease in the price of Bitcoin, the price of ALGO also increases or decreases respectively.

    We can mention cases where the correlation between the price of Bitcoin and ALGO was negative, but their number is very small.

    Ethereum has a great impact on the altcoins market, therefore it is very important to check the correlation between the price of an altcoin and the price of Ethereum. As you can see, ALGO and Ethereum prices have a high (positive) correlation.

    The chart shows the relationship between the ALGO price and the number of transactions made on the Algorand network. It seems that the price correlation with the number of transactions has been variable over time. So sometimes they have had a positive correlation and sometimes a negative one! For example, from November 18, 2021, to December 12, 2021, the number of transactions has also decreased with the decrease in ALGO price. Although there is an increase in the number of transactions until December 21, the price has continued to decrease, which indicates a negative correlation. So, in general, the price correlation and the number of transactions on ALGO have been variable over time.

    In this part, it seems that the correlation between the price of ALGO and the amount of ALGO transferred can depend on other market conditions and news. In general, it cannot be said that the correlation is positive or negative!

    It is clear from the price chart of ALGO and SOL that both follow the same trend, and their correlation is very positive. Of course, considering that both have a high correlation with the price of Bitcoin, this result was not far from expected.

    The price behavior of SOL compared to Bitcoin is also similar to ALGO and they are highly correlated.

    As you can see, in some cases, the reaction of the price of SOL to the price of Bitcoin has occurred with a delay.

    The correlation of the SOL's price with Ethereum is similar to the behavior of ALGO; there is a positive correlation. There is not even a delay in the reaction of the SOL's price to changes in the ETH's price.

    As you can see, the price of SOL has a negative correlation with the number of transactions on this blockchain. This point was contrary to the behavior of Algorand price with the number of transactions.

    According to the chart, it can be said that the correlation between the price of SOL and the amount of SOL transferred varies over time and does not follow a general rule, hence its behavior is similar to ALGO's behavior.