Is Cardano undervalued? What do the various metrics suggest…

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  • Cardano’s on-chain metrics came out with contrasting projections on market sentiment.
  • A closer look at the price action shows that all is not lost for the bulls.

cardano [ADA] It made a local high of $0.81 about a month ago, but has since been recapturing its gains. At press time, it was trading at $0.585, down 26.5%. A recent report from AMBCrypto stated that whales were unloading their ADA tokens during the decline.

This was a recession signal. Cardano’s consolidation below the $0.6 level should ideally see a phase of accumulation (for bulls). AMBCrypto took a look at some other metrics to understand the state of ADA market sentiment.

Understanding conflicting signals

Source: Sentiment

As mentioned earlier, ADA addresses have shed some of their stake over the past month. The number of wallets holding 1k-1 million ADA was in a declining trend. The average coin age (90-day) metric on the chart above also dropped sharply in the latter half of March.

Nevertheless, it started improving in the last two weeks. This indicated that some accumulation was once again underway. The MVRV ratio was also in negative territory. This revealed that investors suffered unrealized losses and the asset was undervalued.

Another metric to track the network valuation of an asset is the Network Value to Transaction (NVT) ratio. NVT’s 7-day simple moving average with circulation showed that the metric rose to 166 on April 6. This was approximately the same as in May 2023 when we saw a reading of 185.

This showed that ADA was given more importance, which conflicted with the findings of MVRV. Since these metrics were at an impasse, we will have to look elsewhere to resolve the dispute.

Assessing Market Sentiment

Source: Sentiment

AMBCrypto looked at social metrics and price action charts to understand where market participants are positioned. The 7-day SMA of Social Dominance fell sharply after April 24.

During the last week, it once again went up. Meanwhile, social volume has gradually declined since mid-March.

Weighted sentiment was also negative for most of the past month. This reflected bearish sentiment among participants on social media. This also coincides with the price decline seen by ADA in recent weeks.

Source: ADA/USDT on TradingView

Technical analysis of the 1-day chart showed that the market structure in this time frame was, barely, bullish. It has yet to close a 1-day trading session below its low of $0.568 since late February.

The weekly chart showed strong bullish momentum after ADA surpassed the April 2023 low of $0.46 in December and continued moving higher.

read cardano [ADA] Price Forecast 2024-25

However, the RSI stood at 41 and reflected a strong bearish sentiment. The Fibonacci retracement level shows that $0.525 is the next support level that could draw prices towards it.

On the other hand, OBV has been moving strongly up since the beginning of February. This was an encouraging sight, indicating that even the decline to $0.525 may eventually reverse and the market may not fall into a downtrend.

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