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Highlights
- Cardano price could drop by 30% to $0.23 if China pushes through with ETH sell-off.
- About 7,000 ETH remaining from the 542,000 ETH ($1.3 billion) PlusToken scam have been sent to exchanges.
- ADA displayed the second-highest correlation with ETH over a 90-day period after Polkadot (DOT).
Cardano price trends in a crucial zone as the crypto markets struggle to rise against Bitcoin’s sell-off. In the meantime, ETH seized in the PlusToken scam has been transferred to centralized exchanges and is likely to be sold. Considering Cardano (ADA), one of the key Ethereum-killers, will it survive a $1.3 billion sell-off?
Why PlusToken’s $1.3B ETH Matters For Cardano Price?
In early August, the remnants of ETH seized from the PlusToken scam awoke on-chain for the first time since 2021. In the last 24 hours, exchanges have received about 7,000 ETH of the remaining 542,000 ETH ($1.3 billion), signalling an intention to sell the remaining tokens.
By the time of its closure, the PlusToken scheme had amassed 830,000 ETH ($1.984 billion). The Ether remained largely untouched until the summer of 2021, when just under a third of the 830,000 ETH was sent to a relatively unknown exchange called Bidesk and presumed sold.
In the last 24 hours, 15,700 ETH was moved from the last known addresses, with 7,000 ETH sent to Binance, Bitget, and OKX exchanges. It’s likely that additional exchange deposit addresses will become active over time.
The potential sale of the PlusToken seized assets could significantly affect other crypto prices. Ethereum is the backbone of many decentralized finance (DeFi) platforms and decentralized applications (dApps). A drop in Ethereum price can impact the performance and stability of these platforms, which in turn can affect the value of tokens associated with them.
Many altcoins have a high correlation with ETH, meaning they would be impacted by the fall in the price of Ether. A look at the Crypto Correlation Tool shows ADA is highly correlated with ETH. In fact, it has one of the highest correlations with ETH over a 90-day period, right behind Polkadot (DOT).
The Pearson correlation coefficient measures the relationship between two crypto assets’ daily returns. A value closer to 1 indicates that if one asset rises, the other likely will too, while a value near -1 means they move in opposite directions. With a correlation coefficient of 0.8, ADA’s price is significantly affected by Ethereum’s volatility.
ADA price is down 1.9% in the last 24 hours and is trading at $0.3395.
How Low Could Cardano Go If ETH Price Hits $1950?
If China follows through with the sell-off, the price of Ethereum is likely to tank. When the Ethereum Foundation sold ETH worth $30 million, the ETH price dropped by about 4.8% on that day. Scaling that up to $1.3 billion, the estimated price drop would be around 16.8%, bringing Ether down to a new yearly low of $1,953.
With a correlation coefficient of 0.8 between ADA and Ethereum, if the latter falls by 16.8%, the former would drop by 30.24%, setting it around $0.23.
Nevertheless, if China fails to sell the Ethereum, this would translate to market strength, and the ADA price would rebound from the current level toward the upper trend line near $0.45, constituting a 23.56% increase.
The calculations here are overly simplified and do not account for other factors that influence the market, such as investor sentiment. Overall, the Cardano price lies at a critical point between a potential 23% profit and 30% losses. What China does next could determine the fate of the ADA price.
Frequently Asked Questions (FAQs)
1. What is the PlusToken scam, and how is it affecting the market?
2. Why would a sell-off of Ethereum affect Cardano price?
3. Could Cardano price recover if the ETH sale doesn’t happen?
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