As cryptocurrency markets are highly volatile, crypto players tin't end arguing virtually what really impacts the price of certain coins and what does non.

Some crypto pundits believe a larger amount of tokens staked in Proof-of-Stake (PoS) blockchains could push the cost upwardly by reducing the circulating supply, making the remaining tokens more valuable. But blockchain and crypto analytics house Messari has crunched the numbers and reports that there is little correlation between the two.

Announcements correlate with price though

In an April 1 blog post, Wilson Withiam, a researcher at the Messari analytics team, provided an analysis of 21 popular staking networks like Cosmos (ATOM) and Tezos (XTZ) in guild to examine the level of correlation betwixt the amount of staked tokens and price changes.

He constitute prices of the analyzed tokens are actually more than correlated with project-related announcements than the amount of liquid supply of staked tokens.

Cosmos (ATOM) experienced the most significant price drop among the analyzed networks in 2020 despite having the highest staking total of more than than xc%. The state of affairs was affected by internal issues involving the shift of the company'due south priorities amid multiple departures, the researcher added.

In dissimilarity, Dash (DASH), which saw one of the biggest cost upsurges among the analyzed tokens over a year-to-date catamenia, has fewer tokens staked. Co-ordinate to the analyst, the token was rather more impacted by a March 2020 proclamation well-nigh its new Dash v0.11 platform release. Indeed, Dash was amongst the top performers, with its price surging nearly 40% over a calendar week in March later on the Dash Core Group released significant updates for its platform, as Cointelegraph reported.

Percentage of supply staked compared to change in price

Percentage of supply staked compared to change in price. Source: Messari

What is staking and why is it believed to impact crypto prices?

Staking is the process of holding crypto funds to support operations of a blockchain network. Staking is similar to earning dividends or involvement on an investment as users receive staking rewards.

Dissimilar Bitcoin's (BTC) original Proof-of-Work (Prisoner of war) consensus, which is based on miners' work, the PoS algorithm operates depending on a validator's stake in the network. Every bit the second-largest cryptocurrency, Ether (ETH) is expected to shift from PoW algorithm to PoS consensus in 2020 which has increased the amount of attention on staking recently. Binance, the world'south biggest cryptocurrency exchange, has been expanding its staking products since it launched its own dedicated staking platform in September 2019.