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Layer-1 Cryptocurrency, Cardano (ADA) has been stable in price range since early December. However, its price has been on a downward trend over the past week, down 17% in the last seven days.
This decline is believed to be due to a combination of factors, including sell-offs from large holders and profit-taking by many investors. This puts the altcoin at risk of remaining below $1 USD in the short term, and this analysis details how.
Cardano Recorded Spike in Profit-Taking Activity
The decline in Cardano Large Investor Net Flow, an index that tracks the buying and selling activity of large investors or “whales,” confirms the decline in ADA accumulation by this group of Holders. Data from IntoTheBlock shows that ADA’s major investors’ net inflows have dropped 139% over the past seven days.
Large investors are understood to be “whales” holding more than 0.1% of the total circulating supply of the asset. When their net cash flow declines, it shows that whales are selling their assets. This is a negative signal, suggesting that these large investors may be losing confidence in the future value of the asset.
The recent surge in profit-taking in the ADA market is not limited to large investors. This trend has spread to the majority of coin holders, reflecting a widespread decline in confidence in the future value of the asset.
Supporting this sentiment, the Market Value to Real Value (MVRV) ratio of altcoins has shown a steady decline. Data from Santiment shows that the MVRV ratio peaked at 113% on December 2 before starting to trend down. According to the latest update, this rate stands at 72.35%.
This index tracks whether an asset is over- or under-valued by Holder. When it falls, it shows that the gap between an asset’s market value and its realized value is narrowing.
In the case of ADA, while remaining positive, the decline in MVRV suggests that Holder is taking profits, reducing the level of unrealized gains. This points to a decline in bullish sentiment and increased selling pressure in the market.
ADA Price Prediction: Fall Toward $0.77 Possible
From a technical perspective, the daily chart shows that ADA’s next major support lies at $0.90. While it is trading at $1.01 at the time of writing, increased profit-taking will see the price test this support. If it fails to hold, the coin’s price will fall to $0.77.
On the other hand, if buying activity recovers, the ADA coin price could recover to $1.06 and rise to a two-year high of $1.32.
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