Cardano (ADA) May Remain Below $1 Amid Whale Selloff and Profit-Taking

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As a seasoned analyst with over a decade of experience in the cryptocurrency market, I find myself often intrigued by the ebb and flow of altcoins like Cardano (ADA). The recent decline of ADA, though not entirely unexpected given the broader market conditions, is indeed concerning.

Since the beginning of December, the cryptocurrency Cardano (ADA), classified as a Layer-1 coin, has been holding steady within a specific price range. However, over the last week, its value has seen a decline, dropping by approximately 17% over the past seven days.

This drop is primarily due to several reasons, such as big investors selling off their shares and numerous individual investors cashing out their profits. Consequently, there’s a possibility that this cryptocurrency could stay under the $1 mark for a while, as this breakdown explains.

Cardano Sees Spike in Profit-Taking Activity

As a researcher, I’ve noticed an intriguing trend in the crypto market: The significant drop in the netflow of Cardano’s large investors or ‘whales,’ a metric that gauges their buying and selling activity, indicates they’re offloading ADA at an unprecedented rate. Over the past week, IntoTheBlock’s data reveals a staggering 139% decrease in the net accumulation of ADA by these prominent coin holders. This could potentially signal changes in their investment strategy or sentiment towards Cardano.

In simpler terms, when we talk about large holders, we’re referring to those who control more than 0.1% of a given asset’s total supply, which are often referred to as “whale” addresses. A decrease in their net outflow (the difference between the amount they send out and receive) implies these big investors might be offloading their assets. This downward trend is known as a bearish signal, suggesting these large investors may be doubtful about the asset’s future price increase.

It seems that even smaller-scale ADA market participants are jumping on the bandwagon with profit-taking, indicating a widespread skepticism about the coin’s future value growth.

In line with this belief, the Market Value to Realized Value (MVRV) ratio for this altcoin has been trending downwards steadily. According to Santiment’s data, the MVRV ratio reached a high of 113% on December 2 and has since been decreasing. As of the most recent update, it currently stands at 72.35%.

This measure indicates if an asset is more expensive than what its owners originally paid (overvaluation) or less expensive (undervaluation), on average. When this measure decreases, it suggests that the difference between an asset’s current market price and its actual worth to its owners is becoming smaller.

As I delve into the data associated with ADA, although I maintain an optimistic outlook, the downward trend in MVRV seems to indicate that holders are cashing out their profits. This shift suggests a decrease in unrealized gains, which could be a sign of dwindling bullish sentiment and mounting selling pressure within the market.

ADA Price Prediction: A Decline Toward $0.77 Is Possible

Looking at a technical viewpoint, the daily chart indicates that if ADA drops, its primary support might be around $0.90. Presently, it’s trading at $1.01, but heightened selling could push it towards this support level. If it can’t maintain this level, the price is expected to fall to approximately $0.77.

Conversely, should purchasing activity pick up again, it’s possible that the price of ADA could bounce back to $1.06 and potentially reach its two-year peak of $1.32.

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2024-12-11 10:13