Data from analytics platform IntoTheBlock has highlighted a concerning trend within the Cardano (ADA) network, revealing a significant decrease in profitability for its holders. Unlike cryptocurrencies like Bitcoin and TRX, where a high percentage of holders are in profit, Cardano stands out with only 35% of its holders currently seeing gains.
This insight sheds light on deeper challenges within the Cardano ecosystem, as many transactions involving ADA are now at a loss. Specifically, out of 1.59 million addresses holding 14.07 billion ADA, a large portion of these tokens were acquired at higher price points that are not profitable in the current market conditions.
A notable 2.73 million addresses are underwater, holding 20.07 billion ADA purchased at price levels between $0.5975 and $0.7265. This significant segment of loss-bearing investments exerts downward pressure on ADA’s market price, contributing to recent price volatility.
Despite this bearish outlook, ADA has shown resilience with a 4.2% weekly gain, bringing its price to $0.4661 at the time of writing. Investor confidence in the token’s fundamentals remains evident, with the crypto community speculating on potential future gains for ADA based on historical data and technical analysis.
Prominent crypto analyst Ali points out that ADA’s Market Value to Realized Value (MVRV) ratio is currently lower than -22%, indicating that the asset is undervalued. Similar conditions in June 2023 led to a substantial 75% increase in ADA’s value, prompting forecasts of a potential surge in price to $0.80. This would mark a significant recovery and the highest value for the token in over a year.
Technical analysis also supports bullish predictions for Cardano, with indicators signaling a potential bull run. ADA’s Relative Strength Index (RSI) and Simple Moving Average (SMA) crossovers mirror previous setups that led to major price increases. Despite the current low holder profitability, the combination of technical indicators and historical performance suggests that ADA could be on the verge of a significant upward trajectory.