Solana, Cardano, Polkadot: Which mega-alt makes for a good festive-season trade

The year 2021 has been exceptionally good for the altcoin market starting from the rise of Defi tokens to the growth of smart contract platforms, the upswing in Metaverse tokens, and the rise of Layer-2 protocols.

Mega altcoins or large-cap alts like Solana, Cardano, and Polkadot noted high yearly ROIs this year rallying independently at some point or other. Thus, garnering high social attention as well as retail boost. However, this rather fruitful year (at least for some coins) had somewhat come to an end.

The aforementioned large-cap altcoins seemed to take a bearish turn. The festive bells hadn’t yet rung for DOT, ADA, and SOL as the altcoins noted heavy correction after BTC’s fall under the $50K level. So, with these altcoins testing their lower support levels, can this be a year-end ‘buy the dip’ opportunity.

Also, will these altcoins make a good festive season investment?

Where do the top gainers stand?

At press time, the global crypto market cap sat at $2.12 trillion. Thus, presenting an over 6% decrease in just 24-hours. On 14 December, Bitcoin made a trip to the $45.6K level as Solana presented 22.44% weekly losses. While Polkadot was down 10% and Cardano by 14.41% in the same time frame. 

Cardano after reaching an ATH of $3.01 in early September started a downtrend. Further, it was testing the long-term $1.2 support, at the time of writing. Solana, on the other hand, has rallied for the most part of the year. Notably, rising from $1.6 on 1 January to $154.80, at the time of writing.

However, SOL too was testing the lower $151 support at press time. Polkadot, amid the parachain auction hype, rallied by 390% from July to November making a new ATH of $55. But DOT too has been in a downtrend and tested the lower $25.9 support. 

Source: TradingView

Well, these altcoins testing lower supports could lead to a bullish bounce especially with the festive season around the corner. So, does that make this a good ‘buy the dip’ opportunity? 

The future price trajectory

As per November’s Crypto Compare report, ETH was the best performing asset out of the largest cryptocurrencies, returning 7.9% throughout the month. It was followed by SOL returning 2.8%. On the other hand, ADA presented -39.19% and DOT -43.96% ROI vs USD over the last month. 

Notably, volatility for all the three altcoins had picked up. Solana and Polakdot noted 1.04 and 1.08 annualized standard deviation of daily returns over a window of time. While Cardano’s volatility was 0.98 it had seen a more sharp uptick since October. ADA’s Sharpe ratio noted -4.4 and had made its way up from the all-time low of -5.7

Source: Messari

DOT and SOL too had low Sharpe ratios, noting -5.79 and -4.5, at the time of writing. Nonetheless, near-term external catalysts such as the parachain launch event for Polkadot can aid price breakout if the altcoin flips the crucial lower support. 

For Solana, its over 76% of staked tokens, reduce the circulating supply across exchanges further pushing the narrative for the coin. Furthermore, in terms of development activity, Solana has been leading the way among top cap crypto projects and has surpassed the daily github submission rates of Polkadot and Cardano over the past month. 

Source: Santiment

That being said, the three altcoins were at crucial price levels at press time. A move above or below those levels could direct their path ahead. Prospects look brighter for DOT and SOL as compared to ADA, on the price front. While they can make good festive trades, the element of risk due to higher Sharpe ratios cannot be ignored.