Cardano (ADA) has been racking up significant gains in recent weeks. In the last seven days, the altcoin’s value has risen by 55%. It currently trades at $0.57, a price level that has not been seen since April.
On-chain data shows that the rise in the coin’s value has provided substantial gains to its holders. However, most investors have yet to realize these gains. Therefore, as profit-taking intensifies, ADA could face a pullback in the near term.
Cardano’s Rally Puts Many Holders in Profit
Cardano’s market value to realized value (MVRV), which measures the overall profitability of all its holders, has only seen positive figures over the past seven days. According to data from Santiment, the 30-day and 90-day MVRV ratios are 25.70% and 43.87%, respectively.
Read more: Earn Cardano – Learn how to stake ADA
Cardano MVRV ratio. Source: Santiment
When an asset’s MVRV ratio is positive, it is considered overvalued. This means that its current market price is higher than the average purchase price of its coins in circulation.
While Cardano’s positive MVRV ratio indicates solid gains for holders, it also highlights the potential for increased volatility. Some investors may decide to take profits, putting downward pressure on the coin’s price in the short term.
Furthermore, the fact that daily transactions involving the altcoin have returned more gains than losses recently could be another reason why holders decide to sell. BeInCrypto’s review reveals a sharp increase in the coin’s daily trading volume in profit over the past seven days.
Cardano Transaction Volume in Profit. Source: Santiment
On Wednesday (13), this indicator totaled 5 billion. In addition, the ratio between the volume of daily on-chain transactions in profit and loss was 1.04. That is, for every ADA transaction that resulted in a loss, 1.04 transactions returned a profit.
ADA Price Prediction: Will Traders Resist the Urge to Sell?
According to IntoTheBlock, due to the price increase, 52% of all addresses holding Cardano are currently “in profit.” This means that 2.3 million addresses would be profitable if they sold their coins at the current market price.
On the other hand, 41.3% of all ADA holders, 1.86 million addresses, are “at a loss”, that is, they have unrealized losses.
Global In/Out of the Money da Cardano. Fonte: IntoTheBlock
If high profitability encourages many holders to sell their coins, this will put downward pressure on the price, preventing a continuation of the rally towards the $1 mark.
If the selling pressure gains momentum, ADA could drop towards the support at $0.54. If this level fails to hold, its price could plunge further to $0.47.
Read more: How to Buy Cardano (ADA) and Everything You Need to Know
Cardano Price Analysis. Source: TradingView
However, if holders resist the temptation to sell and double down on accumulating coins, it could push the price above $0.60, setting the stage for a possible move towards its year-to-date high of $0.81.
The article Profit Holders Threaten Cardano Rally; Correction in Sight? appeared first on BeInCrypto.
