Question

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?

In this dashboard the following tables are used to extract information:

flipside_prod_db.ethereum.token_prices_hourly

flipside_prod_db.algorand.prices_swap

ethereum.core.fact_hourly_token_prices

flipside_prod_db.algorand.transactions

flipside_prod_db.algorand.transfers

solana.core.fact_transactions

solana.core.fact_transfers

ALGO Price vs. ETH Price

Correl(ETH,ALGO)=0.91

Positive & very strong correlation

ALGO Price vs. BTC Price

Correl(BTC,ALGO)=0.92

Positive & very strong correlation

SOL Price vs. ETH Price

Correl(ETH,ALGO)=0.96

Positive & very strong correlation

SOL Price vs. BTC Price

Correl(ETH,ALGO)=0.94

Positive & very strong correlation

ALGO Price vs. Algo Transfer Count

Correl(ETH,ALGO)=0.45

Positive & moderate correlation

SOL Price vs. SOL Transfer Count

Correl(ETH,ALGO)=0.46

Positive & moderate correlation

ALGO Price vs. Algorand Transactions Count

Correl(ETH,ALGO)=0.52

Positive & moderate correlation

SOL Price vs. Solana Transactions Count

Correl(ETH,ALGO)=-0.09

Negative & Very weak correlation

• Since the beginning of February 2022, the number of Algorand network transactions and the number of ALGO transfers have gradually decreased.

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• The highest number of transactions on the Algorand network and the highest number of ALGO transfers are related to May 11 and 12. The price of ALGO on this day was 0.4 USD, while less than a week before this date, ALGO was trading at the price of 0.74 USD.

• From the beginning of February to April 9, the number of transactions on the Solana network gradually decreased. The number of SOL transfers also showed a downward trend. On April 9, the number of transactions reached 10M transactions. On this day, SOL price was 110 USD. While the price of SOL was 136 USD a few days before this date.

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• The lowest number of SOL transfers is on April 30 (882k). On this day, SOL price was 92 USD.

Methodology

In this dashboard, the correlation between ALGO price and the following parameters is analyzed:

• BTC Price

• ETH Price

• Number of ALGO Transfer

• Number of Transactions on Algorand

  To compare with other network, we repeat the above process for SOL price.

  The time frame considered in this dashboard: from the beginning of February until now.

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Correlation

To obtain the correlation, we used the relationship shown on the right. If we wish to label the strength of the correlation, for absolute values of r, 0-0.19 is regarded as very weak, 0.2-0.39 as weak, 0.40-0.59 as moderate, 0.6-0.79 as strong and 0.8-1 as very strong correlation. On the other hand, the correlation coefficient can be positive or negative. A positive correlation coefficient means that as the value of one variable increases, the value of the other variable increases; as one decreases the other decreases. A negative correlation coefficient indicates that as one variable increases, the other decreases, and vice-versa.

Result

(1). The general price chart behavior for BTC, ETH, ALGO and SOL is similar. In fact, ALGO and other altcoins follow the price behavior of BTC. (The very strong correlation between prices confirms this.)

(2). The correlation between ALGO price and BTC and ETH price is lower than the correlation of SOL with BTC and ETH. And this is the superiority of ALGO over SOL.

(3). Unlike the price of SOL, which has no correlation with the number of transactions on the Solana network, the correlation between the price of ALGO and the number of transactions on the Algorand network is moderate.

(4). The correlation of ALGO price and SOL price with the number of their transfers on their own network is almost the same.