Research firm Messari published a report on the performance of 5 sectors in the crypto industry after the recent collapse. Written by Roberto Talamas, the report determined that smart contracts (Solana, Cosmos, Polkadot, Kusama, and others) are among the least affected by this event.
Incessant selling pressure caused major cryptocurrencies to correct by more than 50% in mid-May. June 3rd the cryptocurrency market closed positive for the first time since then. As Talamas pointed out, the smart contracts sector had an overall 3.11% return on assets such as Solana, DOT, ATOM, KSM, CKB.
As seen in the char, DeFi projects and decentralized exchanges have equal returns with 2.70% followed by cryptocurrencies with the lowest returns after web3 applications. Overall, the performance of the cryptocurrency market during the week of June 3rd it was a “bit bumpy,” the investigator said. He added:
Overall asset prices fell in the middle of the week, causing losses of 10-25%. As of May 30, portfolio returns found some equilibrium as prices rallied, recovering some of the performance from earlier in the week.
Solana and the cryptocurrency market hit by high volatility
During the week, Talamas saw a V-shaped pattern of the sectors studied that point to a potential recovery. However, DeFi and Web3 began to underperform at the end of the week and posted moderate losses.
Chainlink (LINK), Uniswap (UNI) and Aave (AAVE) were the worst performing assets in the Web3 and DeFi sectors, respectively. UNI and AAVE recorded losses of around 3.5 and 4.7%, while LINK had a loss of 6% during the same period.
This suggests an increase in volatility. On the subject, Talamas said:
(Volatility) remains high in all portfolios in the sector after the rebound caused by the market crash in mid-May. Before the crash, volatility across all sectors was roughly the same, ranging from 3% to 6%. After the collapse, the volatility of the sector has dispersed widely.
With volatility, the correlation between Solana and all assets has also increased. This metric reached 85% and 95% for certain pairs.
As seen below, the correlation with the market’s dominant asset, Bitcoin, has steadily increased. Talamas noted that this trend started in early May. During this period, some cryptocurrencies started to post losses.
The DeFi and DEX sector are the most correlated with Bitcoin with Solana and the Smart Contract platform registering the lowest correlation with an increase of 20% in the last month. Talamas also noted the following:
The correlation between Ethereum and all wallets in the sector is now equal to or greater than 90%. Aside from the wallets that have a considerable allocation to Ethereum (Smart Contract Platforms and Top Assets), the DeFi and DEX wallets have the highest correlation coefficients at 94% and 93% respectively.
At the time of writing, Solana (SOL) is trading at $ 38.83 with small losses on the daily chart and a 15.4% gain on the 7-give chart. The SOL recovery appears to be showing the most conviction and could quickly return to previous highs if the trend continues.