The Correlation Between ADA and ETH: What will Happens even if China Sells $1.3 Billion in PlusToken Assets?
Ethereum is a decentralized open-source blockchain system that features its own cryptocurrency, Ether. ETH works as a platform for numerous other cryptocurrencies, as well as for the execution of decentralized Smart contrats.
Ether is the native cryptocurrency of the platform. Among cryptocurrencies, ether is second only to bicoin in market capitalization, It is an open source software.
Current Market postion
At the time of reporting, Ethereum was trading at $2,407, following a nearly 4% price drop within 24 hours and now slowly recovering. This price drop aligns with a general bearish sentiment in the wider cryptocurrency market, with the Fear and Greed Index hitting a seven-day low of 39.
Ethereum investors are increasingly worried about the the potential market disruption that could arise a possible sell-off of 542,000 ETH, worth over $1.3 billion, by Chinese authorities.
In the past 24 hours, 15,700 ETH has been transferred from the previously known addresses, with 7,000 ETH being sent to Binance, Bitget, and OKX exchanges. It’s expected that more additional exchange deposit addresses will become active in the near future.
How PlusToken’s $1.3B ETH Liquidation Could Impact Cardano’s Price?
The potential sale of the PlusToken seized assets could have a major ripple affect on other cryptocurrency prices. Since Ethereum serves as the foundation of the backbone of many decentralized finance (DeFi) platforms and decentralized applications (dApps). A decline in its price could impact the performance and stability of these platforms,ultimately affecting the the value of tokens associated with them.
Many altcoins exhibit a strong correlation with ETH, meaning a drop in Ether’s price could have a direct impact on them. According to the Crypto Correlation Tool, shows Cardano {ADA} is notably highly correlated with ETH, ranking just behind polkadot{DOT}in terms of one of the highest correlation over a 90-day period. This suggests that a significant price movement in Ether could ripple through these correlated assets.
The Pearson correlation coefficient measures the strengthof the relationship between two crypto assets’ daily returns. A value near to 1 indicates that if one asset rises, the other is likely to follow. while a value near -1 suggests they move in opposite directions. With a correlation coefficient of 0.8, Cardano{ADA} price is highly sensitive to Ethereum’s price movments and volatility.
Currently, ADA’s price has dropped by 1.9% over the last 24 hours, trading at $0.3395. This decline reflects its strong correlation with Ethereum amid market uncertainity.
Why Cardano’s Future Growth at Risk?
Other market factors have adversely affected Cardano’s effort to reclaim its all-time high {ATH}, including limited demand for new price level. While cardano focuses on enhancing its scalability and sustainability, it combines both the importance of improving the blockchain, however, the competition from Ethereum (ETH), and other recent blockchain networks like Solana (SOL) and Polkadot (DOT) has intensified. Additionally,the market sentiments remains weak due to a broader decline across many altcoin, including ADA. As a results ADA strugglling to regain its $3.10 ATH, and may potentially settle around $0.32 by 2025 if current trends persists.
Cardano Holders Begin to Lock in Profit
Cardano’s Chaikin Money Flow {CMF} has experienced a downward trend in the recent days. The CMF measures the movement of capital into and out of the market, and while it remains positive, this gradual decline could serve as a warning sign.
A positive but declining CMF indicates that, although there is still buying pressure, the strenght of that buying is diminshing. This suggests that demand for the asset may be waning, with buyers displaying less aggression. If this trend persists, it could signal a shift toward decreased market interest or heightened selling pressure.
Expect a 29% Price Decrease for ADA: Here’s Why
Cardano is currently trading at $0.34 and is looking to dip below its Ichimoku Cloud, which has recently established itself as a support level.
The Ichimoku Cloud indicator is a comprehensive tool that identifies trends, support and resistance levels, and potential reversal points in the market. When an asset’s price approaches the cloud, it often indicates a loss of bullish momentum, suggesting that the recent upward price movements may be losing strenghth. This could signal a shift in market sentiment and a potential downward trend for ADA.
If Cardano bulls are unable to maintain the the cloud as a support level, ADA’s price could potentially drop by 29% in the near term, bringing it down to the August 5 low of $0.27. This decline could reflect a significant change in the market dynamics and investor sentiment, highlighting the importance of the cloud as a critical support barrier for ADA.
However, if the market trend shifts from bearish to bullish and ADA starts to experience an increase in demand, its price may could rise towards the resistance level at $0.47. This sfift in momentum would suggest renewed investor intrest and potential buying movement in the price of cardano.
Disclaimer: The information provided in this analysis is for only informational and educational purposes only. Don’t considered as a financial advice. Cryptocurrency investments is a high level of risk, and past performance is not an indicative of future results. Before making any investment decisions, you should do your own research and consult with a qualified financial advisor.