Even though the market has entered pumping season, a handful of altcoins that don’t replicate Bitcoin’s price movements are at a disadvantage.
UNI, ATOM and LUNA – three different altcoins from separate forks of the crypto space, share a fragile relationship with Bitcoin. follow data von Skew reflects the 1-month correlation of these altcoins with Bitcoin values of 0.5 each; 0.4 and 0.3 at the time of writing.
Simply put, correlation measures the degree to which two variables move together. The higher the correlation, the higher the interdependence and vice versa.
With the above correlation data in mind, it is safe to say that the coming days will be quite difficult for UNI, ATOM and LUNA if Bitcoin continues to make strong moves.
No support from on-chain indicators?
Assessing the status of UNI, ATOM and LUNA on-chain indicators will help determine how harmful they are.
Uniswap’s Network Value to Transaction Value Ratio (NVT) spiked several times in October, but it’s now on the downside. NVT essentially sheds light on the relationship between market capitalization and trading volume. If the NVT is high, this indicates that the network value is greater than the value transmitted in the network and vice versa.
Usually uptrends have a positive effect on long-term valuation, but the current state of this indicator seems just plain chaotic.
NVT – Uniswap | Source: Messari
The basics of ATOM and LUNA also appear to be deteriorating at the time of writing. For example, the market capitalization of these two altcoins are both close to their one-month lows (0.3%, 0.6%). The decline in this index underscores that ATOM and LUNA cannot exert any influence on the market.
Even the trading volume numbers seem lackluster at the time of writing. In fact, both ATOM and LUNA are at 3 month lows.
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Trading volume – LUNA | Source: Messari
At UNI, ATOM and LUNA, too, volatility seems to be easing – which significantly reduces price volatility.
Strangely enough, the second half of October last year was not a good time for UNI, ATOM and LUNA either. Investors did not get an adequate return compared to the risk they took.
It should be noted that the Sharpe coefficient (a measure of the return per unit of risk on investments) was negative for Uniswap and ATOM around this time last year, while that of LUNA was slightly positive. A similar situation can also be observed at the time of going to press.
The risk-adjusted returns for UNI and ATOM are 0.1 and 0.5, respectively, while LUNA’s are slightly higher – around 0.9.
Sharpe coefficient – ATOM | Source: Messari
Therefore, looking at the past, the overall state of the indicators and the correlation with Bitcoin, things are not going well. It will be a few more days for UNI, ATOM and LUNA to trade higher, but a constant upstream is very unlikely at the moment.
source: news.coincu.com
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