The gap between Cardano (ADA)'s market cap and realized value (MVRV) has approached 52.71%, which may indicate an impending pullback.
Moreover, the increase in the network value to transaction volume (NVT) ratio indicates that the growth rate of ADA's market cap far exceeds that of transaction volume, potentially signaling an overheated market.
As the price of ADA approaches $1.30, technical indicators suggest that if selling pressure increases, the price may pull back to around $0.92.
According to historical data, Cardano (ADA) seems to be nearing the overvaluation area. Over the past 30 days, ADA's price has risen by 180%, which may indicate that the timing seems late for some investors, especially with the long-awaited altcoin season just beginning. However, on-chain indicators suggest that ADA may face a pullback before reaching new highs.
Cardano shows signs of a short-term bear market.
A key indicator suggests that Cardano may soon be overvalued, which is the long-short difference between market cap and realized value (MVRV). This difference is used to measure whether long-term holders have more unrealized profits at the current price or whether short-term holders hold the advantage.
When the MVRV long-short difference increases, it indicates that long-term holders are gaining more profits; conversely, if this difference decreases or enters negative territory, it means short-term holders are in the majority. This indicator can help us determine whether a cryptocurrency is undervalued or overvalued.
Historical data shows that in March, when the MVRV long/short difference reached 57.94%, Cardano's price entered the overvaluation range.
As shown in the chart, the current reading of the MVRV indicator has reached 52.71%, indicating that ADA may be nearing overvaluation. If this trend is confirmed, Cardano may experience a significant adjustment.
Furthermore, data shows that the network value to transaction volume (NVT) ratio of Cardano has risen sharply. The NVT ratio is a valuation indicator that measures the value of a cryptocurrency relative to the value transmitted on its network.
When the NVT ratio decreases, it indicates that the growth in transaction volume exceeds market capitalization, typically suggesting that the token is undervalued. The current rise in the NVT ratio indicates that the growth rate of Cardano's market cap is outpacing the growth of transaction volume, which may suggest that ADA's price is set too high. If this situation persists, ADA's value may face a pullback.
ADA Price Prediction: May fall below $1
From a technical analysis perspective, the daily chart of ADA shows that the Bollinger Bands (BB) have significantly expanded. This expansion typically indicates increased price volatility, suggesting that ADA's price may experience dramatic fluctuations in the coming days.
Additionally, the upper band of the Bollinger Bands currently places ADA's price around $1.30. When the price approaches the upper band, it usually indicates that the market is in an overbought state; conversely, if the price approaches the lower band, it indicates an oversold state.
Therefore, Cardano (ADA) seems to have entered the overbought range. In this case, the price may retrace to $0.92. However, if buying pressure continues to increase, the price of ADA may break through current resistance and rise above $1.40.