The Cardano Network is set to leverage $1.3 trillion in Bitcoin liquidity for its decentralized finance (DeFi) ecosystem thanks to a new collaboration with BitcoinOS (BOS), a platform for Bitcoin smart contracts. This could mean a potential alignment of Cardano and Bitcoin prices.
This integration arrives at a moment when ADA and BTC prices show minimal correlation. Will this change the current dynamics?
Cardano Accesses Bitcoin Liquidity
On October 24, BitcoinOS, a Bitcoin roll-up protocol, announced that its Grail bridge will become operational within Cardano’s network.
“Cardano, ranking as the 11th largest blockchain by market capitalization, is incorporating the BitcoinOS Grail Bridge to unlock decentralized programmability and scalability on Bitcoin!” BitcoinOS posted on X.
This advancement provides the Cardano ecosystem with access to Bitcoin’s liquidity, approximately valued at $1.33 trillion. It also allows ADA users to connect with Bitcoin safely and without third-party involvement, further promoting the decentralized ethos of both networks.
In light of this development, market analysts may question whether it will strengthen the correlation between Cardano and Bitcoin prices. Since July, Cardano’s value has dropped by 32% relative to Bitcoin, indicating that the latter has been outperforming the former.
Read more: How to Mine Cardano and Increase Your Holdings
The 30-day correlation matrix from IntoTheBlock further emphasizes this situation. The correlation matrix, or correlation coefficient, ranges from -1 to +1, indicating how closely two cryptocurrency prices move together.
A coefficient near -1 suggests minimal movement correlation, whereas a value close to +1 suggests synchronized price movements. Currently, ADA and BTC display a correlation coefficient of 0.26, implying that the two assets seldom trend in unison.
Nonetheless, this recent progression indicates a potential shift on the horizon. Earlier today, Charles Hoskinson, the founder of Cardano, who has been critical of Bitcoin in the past, shared his insights.
Hoskinson posited that the BitcoinOS bridge would allow the Cardano network to help Bitcoin tap into various facets of DeFi.
ADA Price Forecast: Indicators Signal a Downturn
As it stands, Cardano’s price is $0.34, reflecting a 10% decline over the past month. In contrast, Bitcoin has increased by 7% in the same period.
On the daily chart, the Chaikin Money Flow (CMF) has dipped into negative territory. The CMF is a technical indicator that assesses the level of accumulation or distribution in the market.
An increasing CMF indicates strong buying pressure, while a low reading suggests greater selling pressure. Given the current state of ADA, its price might fall to $0.31 in the near term.
Read more: Cardano (ADA) Price Forecast 2024/2025/2030
In a notably bearish scenario, the price could even fall to $0.28. Nevertheless, should Bitcoin’s value rise to $70,000, it might spark a recovery for ADA, potentially pushing it up to $0.41.
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