• Cardano(ADA), AVAX, and MATIC show strong market correlation, indicating potential synchronized movements.
  • Despite negative sentiment, on-chain data suggests these tokens may be undervalued and poised for future gains.

As market dynamics continue to evolve, investors in Cardano (ADA), Avalanche (AVAX), and Polygon (MATIC) may see promising returns ahead. According to recent data, these cryptocurrencies are exhibiting remarkably parallel movements, suggesting potential synchronized gains if market sentiment shifts positively.

Strong Correlations Amidst Market Challenges

On-chain analysis by IntoTheBlock has revealed that Cardano shares a stronger correlation with Avalanche and Polygon than with any other top cryptocurrencies. As of now, the correlation coefficients for ADA with AVAX and MATIC stand at 0.99 and 0.98, respectively. These figures imply almost identical market movements, indicating that these assets could potentially experience simultaneous upswings or downturns.

Currently, ADA is priced at $0.45, reflecting a 26.40% decrease year-to-date. AVAX is valued at $36.94, a decline of 11.73%, and MATIC is trading at $0.71, marking a 29.21% decrease. These downturns have understandably led to cautious sentiment among investors.

Analyzing Market Sentiment

A closer look at the weighted sentiment metric, which measures the unique social volume and comments about an asset, shows negative readings for all three tokens. ADA’s sentiment is at -1.613, AVAX at -1.018, and MATIC at -1.544, as reported by Sentiment. This negative sentiment indicates a prevailing lack of confidence in these assets’ short-term prospects.

However, seasoned investors recognize that such low sentiment could signal a prime accumulation period before a significant market rebound. Historically, deeply negative sentiment often precedes major price surges as market psychology shifts.

Indicators of Undervaluation

To determine whether ADA, AVAX, and MATIC might be undervalued, it is crucial to consider the Market Value to Realized Value (MVRV) ratio. This metric helps to gauge whether an asset is trading above or below its fair value.

At present, Cardano’s 30-day MVRV ratio is -5.313%, suggesting that holders are currently facing unrealized losses, indicating potential undervaluation. Conversely, MATIC’s MVRV ratio stands at 1.608%, hinting at a marginally positive position but still reflecting recent declines.

The declining MVRV ratios across these tokens suggest that they are trading below their intrinsic values, making them potentially attractive to investors anticipating a market upturn.

Potential for Future Gains

If the market sentiment improves, projections indicate that ADA could rally to $0.67, AVAX to $50.35, and MATIC to $1.06. These projections are grounded in the strong historical correlation between these assets, implying that a positive shift in one could likely influence the others similarly.

Investors should keep a close watch on sentiment trends and market indicators, as these will be crucial in anticipating the next moves for ADA, AVAX, and MATIC. The current market conditions, combined with strong correlations and potential undervaluation, position these tokens for potential gains, making them ones to watch in the coming months.

By Joadin Maina

Beyond the hype, I untangle the web3 revolution, guiding curious minds through the labyrinth of decentralized possibilities.