Try Quests to earn cryptoAlgorand Price Correlation
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?
Introduction
What is Algorand? Algorand is a blockchain that has its own cryptocurrency, ALGO. It has some special features for instance finality that means once something is added to the blockchain it cannot be removed. The blockchain itself works as a payment processor and one of the major benefits as well is that it only takes one ALGO to begin staking and earning rewards, while also keeping the blockchain secure.
Methodology
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Look into how BTC and ETH have been valued over time
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Look into the number of transfers and transactions on Algorand
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Find out if there is a correlation between either and the value of ALGO
Blockchain values
The three above graphs are going to show the value of BTC, ETH, and ALGO over time. If we look towards the end we can notice that they all have taken a deep dive but how close of a correlation is there between ALGO and ETH or BTC. In the middle of January the value of ALGO plummeted by close to 50% and since then it has been slowly declining. However, we can notice that BTC and ETH did not follow that exact trend. Neither of them truly started crashing until April of 2022, which was far after ALGO had lost much of its value. It is interesting to note that BTC and ETH are very highly correlated because if you look at the graphs they are close to identical. The price is different, but this means that the percent change in them would both be very similar on any given day, whereas ALGO has a very different value trajectory.
Algorand Blockchain Activity
Here we are going to look at how the number of transfers and transactions on the Algorand blockchain itself might have something to do with the price. on January 14th there was a major spike in the value of Algorand and ever since it has been declining. When looking at these graphs there is a similar trajectory, just the spike comes one week earlier to the highest Algorand had been valued at all year. Although the number of transactions and transfers is very close the graphs are different, but seem to follow a similar course of dropping quickly after the 7th and slowly declining after the major drop. This is the exact same way that the value of Algorand had acted and it seems there is a strong correlation between the activity of the Algorand blockchain and the value of ALGO.
