Cardano price action is in a critical zone as the cryptocurrency market struggles to combat the Bitcoin sell-off. Meanwhile, ETH seized in the PlusToken scam has been moved to centralized exchanges and is likely being sold. Considering that Cardano (ADA) is one of the main Ethereum killers, can it survive the $1.3 billion sell-off?
Why PlusToken’s $1.3B ETH is so important to Cardano price
In early August, the remnants of ETH seized in the PlusToken scam revived on-chain for the first time since 2021. In the past 24 hours, exchanges received about 7,000 ETH of the remaining 542,000 ETH ($1.3 billion), indicating an intention to sell the remaining tokens.
By the time the PlusToken scam ended, it had amassed 830,000 ETH ($1.984 billion). The ETH remained largely untouched until the summer of 2021, when nearly a third of the 830,000 ETH was sent to a lesser-known exchange, Bidesk, and presumably sold.
In the past 24 hours, 15,700 ETH was transferred from the last known address, of which 7,000 ETH was sent to Binance, Bitget, and OKX exchanges. Other exchange deposit addresses may become active over time.
The potential sale of PlusToken’s seized assets could significantly impact the prices of other cryptocurrencies. Ethereum is the backbone of many decentralized finance (DeFi) platforms and decentralized applications (dApps). A drop in the price of Ethereum could impact the performance and stability of these platforms and, in turn, the value of the tokens associated with them.
Many altcoins have a high correlation with ETH, meaning they are affected by drops in ETH’s price. Looking at the Crypto Correlation Tool shows that ADA is highly correlated with ETH. In fact, over a 90-day period, it has the highest correlation with ETH, second only to Polkadot (DOT).
The Pearson correlation coefficient measures the relationship between the daily returns of two crypto assets. Values closer to 1 indicate that if one asset goes up, the other is likely to go up as well, while values closer to -1 indicate that they move in opposite directions. With a correlation coefficient of 0.8, ADA’s price is heavily influenced by Ethereum’s volatility.
ADA price is down 1.9% in the past 24 hours and is trading at $0.3395.
If ETH price reaches $1950, how low will Cardano go?
If China continues to sell off, the price of Ethereum could plummet. When the Ethereum Foundation sold $30 million worth of ETH, the price of ETH fell by about 4.8% that day. If this is expanded to $1.3 billion, the price drop is expected to reach about 16.8%, bringing Ether to a new yearly low of $1,953.
ADA has a correlation coefficient of 0.8 with Ethereum, and if the latter falls by 16.8%, the former will fall by 30.24%, with a price of about $0.23.
However, if China fails to sell off Ethereum, it will translate into strength in the market and the ADA price will rebound from the current levels to the upper trendline near $0.45, a gain of 23.56%.
The calculations here are too simplistic and do not take into account other factors that influence the market, such as investor sentiment. Overall, Cardano’s price is at a critical point between a potential 23% profit and a 30% loss. What China does next could determine the fate of ADA’s price.
