Cardano and Solana have decoupled from crypto in explosive price increases, which altcoin is next?

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Cardano and Solana decoupled from Bitcoin, Ethereum and the crypto ecosystem, delivering double-digit gains overnight on January 8. On-chain indicators such as Social Dominance and Daily Active Addresses signaled a bullish trend reversal for both. Litecoin’s correlation with Bitcoin and Ethereum is down, the altcoin could be preparing for an explosive price rise.

Cardano and Solana, two competitors of the Ethereum smart contract blockchain network, have recently experienced massive price breakouts. On-chain indicators such as social dominance and network activity in ADA and SOL signaled a bullish trend reversal before the tokens posted double-digit price gains. The next altcoin to follow ADA and SOL in this trend is Litecoin, the bulls are targeting a 22% rally in the payout token.

Learn more about three key developments the Cardano community is looking forward to in 2023 here.

Also Read: Solana Network Witnesses Daily Spike, Bounces 3 Times Before FTX Collapse

Cardano and Solana prices yield more than 20% gains for holders over a 24-hour period

Cardano, the Ethereum-killer smart contract blockchain network, and Solana proof-of-stake layer-1 blockchain generated 20% gains for holders over a 24-hour period from January 8 to January 9, 2023. The correlation from Cardano and Solana with large market cap cryptocurrencies Bitcoin and Ethereum nosediving, altcoins decoupled and saw a bullish breakout.

The correlation matrix below shows the correlation coefficient of assets with BTC and ETH:

Cryptowat.ch correlation matrix

As shown in the chart above, Bitcoin and Ethereum are highly correlated while altcoins like Litecoin, XRP, Cardano, and Solana have either decoupled or seen a decline in correlation. Litecoin’s correlation with Bitcoin has dropped to 0.63.

Three on-chain metrics that signaled a bullish breakout in Cardano and Solana

On-chain metrics such as social dominance, network activity and the ratio of daily on-chain trading volume to profit to loss signaled the trend reversal in Cardano and Solana, based on data from the aggregator of crypto Santiment.

The daily active addresses on a cryptocurrency’s network reflect the volume of activity on the blockchain. A steady increase in daily active addresses indicates an upcoming trend reversal. Just as an increase in whale activity and high value trades signals a spike in selling pressure and a bearish trend reversal, a spike in daily active addresses and high network activity signals an upcoming breakout. bullishness of an asset.

An asset’s social dominance is a metric that uses big data, gleaned from social media forums where the asset is mentioned. A spike in social dominance occurs when mentioned a lot on social media.

The ratio of daily on-chain trading volume to profit to loss is another metric used by analysts. It tracks the total amount of coins or tokens for all transactions on the network that have moved within a given interval. If there is a lower volume of trades that resulted in losses compared to gains, the ratio increases, and vice versa for gains. The chart below shows Cardano’s price appreciating alongside a steadily increasing ratio of daily on-chain trading volume to profit to loss.

The graph also shows that the number of daily active addresses on the network is growing at the same time.

Cardano On-Chain Metrics

The number of daily active addresses (dark green bars) on the network steadily increased during the last week of December, along with the price. This was also accompanied by an increase in social dominance (blue line) and a steadily rising ratio of profit-making trades (light green bars), as well as Cardano price hitting a monthly high of 0.3395 $.

Solana reversed the dead project narrative at 22% daily earnings

The collapse of Samuel Bankman-Fried’s FTX exchange and the migration of NFT projects and dApps from the Solana blockchain to Polygon and Ethereum have fueled a bearish narrative among SOL holders. The Ethereum-killer altcoin wiped out its 2022 gains and suffered a sharp drop in price in November 2022.

Solana has reversed the narrative and recovered from a “dead project” to a proof-of-stake blockchain with high development activity and consistent social dominance and volume. The altcoin saw a huge spike in its trading volume after a 22% decoupling from the crypto market.

Santiment Solana String Metrics

As shown in the chart above, Solana’s price spiked due to increased trading volume, popularity among traders on social media platforms, and social dominance peaking in the market. second half of December 2022.

With its decreasing correlation with BTC and ETH, Litecoin could follow Cardano and Solana higher.

Litecoin price braces for 22% rally

Litecoin, the payment token and alternative to Bitcoin, is on track for a bullish breakout from an ascending channel. The recent crossover of the 50-day exponential moving average (EMA) above the 200-day EMA, confirms a bullish golden cross signal – the altcoin is constantly climbing in an ascending channel.

A break above the upper trendline could push LTC towards key resistance at $85.03 and bullish target at $101.50, a key resistance level on the monthly price chart. As shown in the chart below, Litecoin could witness a 22% rally after the validation of the bullish thesis.

Litecoin’s bullish breakout could be temporary and represent a possible burst or exhaustion move up before a reversal down, so traders should approach with caution.

LTCUSDT Perpetual Contract

The Relative Strength Index (RSI), a momentum indicator, however, reads at 78.70, signaling that Litecoin is overbought. This is a signal to the bulls to stop adding longs, and a potential warning signal. A drop below the 70 level would be a signal for holders to sell their longs and go back short.

If the price drops below the lower trendline of the channel, or the two exponential moving averages at $74.91 and $71.90, it could invalidate Litecoin’s bullish thesis.

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