Cardano (ADA) has been consolidating in a price range since early December. However, the price has been falling over the past week, with a 17% drop in the past seven days.
This decline is attributed to a combination of factors, including selling by large holders and profit-taking by many investors. This puts the altcoin at risk of remaining below the $1 price level in the near term, and this analysis details how this could happen.
Cardano sees increase in profit-taking activity
The decline in Cardano’s large holder net inflow, a metric that tracks the buying and selling activity of large investors or whales, confirms a reduction in ADA accumulation by this group. However, data from IntoTheBlock shows that the net inflow of large ADA holders has plummeted by 139% in the past seven days.
Large holders are whale addresses that hold more than 0.1% of an asset’s circulating supply. When their net inflow drops, it indicates that whales are selling their holdings of an asset. This is a bearish signal, suggesting that these large investors may be losing confidence in the asset’s future price.
Net Flow of Large Cardano Holders. Source: IntoTheBlock
However, the recent surge in profit-taking in the ADA market is not limited to large-scale investors. This trend has extended to the majority of coin holders, reflecting a broad loss of confidence in the asset’s future price potential.
Furthermore, the altcoin’s Market Value to Realized Value (MVRV) ratio has shown a consistent decline. Data from Santiment indicates that the MVRV ratio peaked at 113% on December 2 before beginning its downward trajectory. As of the latest update, it stands at 72.35%.
This metric tracks whether an asset is overvalued or undervalued relative to its average cost to holders. When it decreases, it signals that the gap between an asset’s market value and its realized value is narrowing.
Cardano's MVRV ratio. Source: Santiment
In the case of ADA, despite remaining positive, the falling MVRV suggests that holders are taking profits, reducing the extent of unrealized gains. This indicates a weakening of bullish sentiment and increasing selling pressure in the market.
ADA Price Prediction: Drop to $0.77 is Possible
From a technical perspective, the daily chart shows that ADA’s next major support is at $0.90. While it is trading at $1.01 at press time, an increase in profit-taking activity will see it test this support level. If it fails to hold, the cryptocurrency’s price will drop to $0.77.
Cardano Price Analysis. Source: TradingView
On the other hand, if buying activity resurfaces, ADA price could recover to $1.06 and climb towards its two-year high of $1.32.
The article Cardano (ADA) Below $1 as Investors Sell appeared first on BeInCrypto.
