Cardano, a layer 1 altcoin, has experienced a market correction recently. Despite the dip in price, underlying on-chain data and technical analyses suggest a promising outlook for the ADA token.
Cardano Whales Continue to Accumulate
In a notable development in cryptocurrency, wallets holding between 0.1 million to 10 million ADA tokens have collectively increased their holdings. As of July 17, these wallets held approximately 5.57 billion ADA; by August 1, the figure had risen to 5.69 billion.
This increase reflects a growing confidence among significant holders, indicating a potential bullish sentiment in the Cardano market.
The Market Value to Realized Value (MVRV) ratio, a key metric used to gauge holders’ profit or loss over 365 days, has highlighted a critical buy zone for ADA. The data shows that when the MVRV ratio falls between -20% and -28%, it often signals a buying opportunity.
Notably, on July 6, ADA’s price action bounced off this crucial level, suggesting that investors took advantage of the lower prices to increase their positions. Currently, the MVRV ratio stands at -15%, showing a recovery as it moves closer to the zero line, indicating diminishing losses among holders and a potential return to a neutral or profitable state.
This trend of accumulation by large holders and the movement in the MVRV ratio could suggest a positive shift in market dynamics for ADA. This shift is significant as it could precede a broader market recovery, placing ADA in a strong position for future growth.
Can ADA Rebound Above $0.4 Soon?
Over the past 24-hour period, the ADA price has significantly declined, dropping by 6% to a current value of $0.3794. The cryptocurrency sharply decreased from a high of $0.4048 within this time frame. This decline reflects the broader market reaction, where investors react to ongoing market conditions.
The Layer 1 crypto shows a recent downtrend with a possible reversal scenario. Cardano is trading near the low-value area, indicating potential bearish pressure. If bears continue to exert influence, the price might dip below $0.3919, leading to a possible further decline.
The 4-hour technical indicators for ADA suggest a bearish trend. The Relative Strength Index(RSI) is at 30.45, indicating oversold conditions. This suggests that the selling pressure on ADA may be subsiding, potentially leading to a reversal if buyers step in.
The Moving Average Convergence Divergence (MACD) shows a negative trend, with the MACD line at -0.0019 below the signal line at -0.0049.
Cardano price chart| Source: TradingView
However, the chart also indicates a possible upward movement if ADA can break above the $0.3919 level. This recovery could lead to a significant 20% increase, targeting the value area high of $0.4714. The point of control at $0.4584 is a crucial resistance level that ADA must surpass to maintain bullish momentum.
Frequently Asked Questions (FAQs)
Cardano whales added 120 million ADA in two weeks, showing confidence in ADA’s long-term value and suggesting potential bullish sentiment.
The MVRV ratio at -15% suggests a buying opportunity, indicating possible bullish trends and diminishing losses among holders.
Indicators show oversold conditions with RSI at 30.45. A break above $0.3919 could trigger a recovery, targeting higher resistance levels.
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Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.