A popular analyst says he found a meaningful correlation between two crypto assets and XRP.
Former Adaptive Capital partner Willy Woo says it’s clear that Chainlink (LINK) and Cardano (ADA) tracked XRP’s epic crash last week with a higher correlation than any other cryptocurrency.
According to Woo, the price movements suggest that traders believe the two projects may one day face regulatory challenges like those of XRP.
“Chainlink and Cardano [are] most closely correlated with XRP.
This is not a full backtrace situation. It’s a two-day trend, which means that traders throw regulatory fears of XRP most of all on these two coins. “
Woo says it will be a bumpy ride for the altcoin market following the SEC’s regulatory action against Ripple.
He says the emergence of Bitcoin as a strong store of value is the first step in the long road to the emergence of a fully engineered crypto ecosystem that includes legitimate altcoin-based platforms.
“… it is probably a good time to post a thread on the future of altcoins. And where its place in the crypto-cap dominance may be.
Value storage (very rough):
$ 12 trillion gold
$ 90 trillion fiat
$ 100 trillion of stocks
$ 100 trillion bonds
$ 250 trillion in real estate
Derivatives = $ 1000 trillion +
Derivatives involve buying, selling and transferring risk. The modern world is made possible by them.
Do you want insurance for your home? Do you want food that farmers will grow? How about some financing for your first business? Derivatives enable the risk market to make these activities possible for you. They use collateral in the form of a store of value to operate.
Decentralized Finance (DeFi) in its current form is an experimental area where we are exploring how networks can be built to buy, sell and transfer risk. To do this, the underlying networks need to pull value into their market capitalization to use as collateral. “
According to Woo, Bitcoin’s dominance could gradually decrease to a third of the total market capitalization of all cryptocurrencies as solid crypto projects emerge and establish themselves over time.
“In the traditional world it is a 2: 1 ratio between derivatives and store of value. This would result in a BTC dominance of 33%. The first thing to be built is a store of value. This is why the BTC dominance was so high The downward trend may continue towards 33%.
We are currently at a stage where fraud, Ponzis and security fraud are being excluded from legitimate experiments. The journey becomes uneasy. “
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Selected image: Shutterstock / Kunstofen