Cardano’s correlation with Bitcoin explains what is fueling its downtrend
It is not uncommon to find even the largest altcoins by market capitalization exhibit a strong correlation with Bitcoin (BTC). In the case of Cardano, this correlation is nearing its all-time high (ATH) and thus stirring incredible sell-offs.
According to data from IntoTheBlock, Cardano currently has a correlation score of 0.62 with Bitcoin, as of March 5. Among the top 10 altcoins Cardano exhibited the strongest correlation with over the past few days, with Bitcoin, the correlation has grown consistently. From a low of -0.04 as of mid-December to the current score, it is quite evident that Cardano’s current price performance is massively dependent on Bitcoin.
This metric is demonstrated when the price action of both digital currencies is compared. At the time of writing, Cardano is changing hands at $0.3327, down by 2.40% over the past 24 hours, and by 9.25% in the trailing seven-day period. Bitcoin, on the other hand, is down by 5.37% over the same time period.
Should Bitcoin print a new uptrend, chances are that Cardano will also pick up a bullish pace as bulls would be confident that the uptrend is backed by deep market fundamentals.
Cardano bull incentives
Cardano remains one of the most versatile blockchain protocols in the world at this time, and there is a bullish incentive for long-term holds. The protocol has a massive influx of developers looking to harness its supposedly higher decentralization features as well as security to boost their products.
The protocol is anticipating the launch of Hydra, its scalability tool that will enable it to process millions of transactions at a time. Cardano has maintained impressive price action since the start of the year to date.
Besides the confirmed correlation with Bitcoin, Cardano may pull some additional stunning growth moves that might help it decouple from BTC in the short- to midterm.