Why ADA Coins in Profit May Trigger a Sell-Off
Cardano’s ADA has surged 27% over the past week, driving a significant portion of its circulating supply into profits.
However, this could threaten ADA’s upward trend, as holders may be tempted to sell and secure gains.
Cardano supply profits soar
Cardano double-digit gains The past week has pushed a significant portion of the token’s circulating supply into profit territory. Based on the current market price, investors hold 32 billion ADA coins worth US$31 billion, accounting for 88.40% of the circulating supply of ADA.
For context, at the beginning of this month, only 40% of all ADA tokens in circulation were profitable. However, while this represents bullish momentum for the token market, it also comes with risks. When a large portion of an asset’s supply is converted into profits, holders sell to lock in gains, triggering profit-taking behavior.
Evaluate ADA’s Market Value and Realized Value (MVRV) Ratios confirm this risk. According to Santiment, ADA’s current MVRV ratio is 76.20%.
This MVRV ratio suggests that ADA is overvalued as its market value is significantly higher than its realized value. Therefore, if all currency holders sell, they can make an average profit of 76.20%.
ADA Price Prediction: Drop to $0.79 or rebound above $1?
As of press time, ADA is trading at $0.98above the support at $0.93. If profit-taking activity begins, the coin’s price will attempt to test this support level. If it fails to hold, the downtrend is confirmed and ADA falls further to $0.79.
On the other hand, if market participants do not take profits, this could push ADA price is above $1, trading at $1.15the level last reached in April 2022.
Disclaimer
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