Cardano’s ADA saw a 27% price surge in the past week, pushing a significant portion of its circulating supply into profit. While bullish, this creates potential risks, as investors may cash out their gains.
88% of ADA Supply Now in Profit
The recent rally pushed 32 billion ADA coins, worth $31 billion, into profit. This accounts for 88.40% of the total circulating supply. Just a month ago, only 40% of ADA’s supply was profitable.
While this reflects strong market momentum, it introduces the risk of profit-taking. When a large percentage of an asset’s supply becomes profitable, investors often sell, which can create downward pressure.
MVRV Ratio Shows Overvaluation Risks
Data from Santiment highlights a current Market Value to Realized Value (MVRV) ratio of 76.20% for ADA. This suggests ADA may be overvalued, as its market value significantly exceeds its realized value. If all investors sold their holdings, they would realize an average 76.20% profit.
This high MVRV ratio raises concerns about potential selling activity, especially during strong rallies like this one.
ADA Price Prediction: Key Levels to Watch
At press time, ADA trades at $0.98, just above its $0.93 support level. Two scenarios could unfold in the coming days:
- Profit-Taking Pullback: If selling intensifies, ADA may breach the $0.93 support, leading to a potential dip toward $0.79.
- Bullish Continuation: If investors hold their positions, ADA could break past $1, climbing to $1.15—a level last seen in April 2022.
Will ADA Sustain Its Rally?
ADA’s performance depends heavily on market sentiment and investor actions in the coming days. While its recent surge highlights growing optimism, the potential for profit-taking could stall its momentum. A breach of the $1 level, however, could solidify a longer-term bullish trend.
