Cardano (ADA) has recently reached an all-time high (ATH) in a critical on-chain metric, suggesting that a notable rally could be on the horizon despite the token’s recent underperformance. According to market intelligence firm IntoTheBlock, nearly 40% of ADA’s total supply is now held by long-term investors—those who have held their tokens for over a year. This substantial holding by long-term investors reflects a strong level of confidence in ADA’s future potential, even as the token currently faces a year-to-date (YTD) loss exceeding 43%, making it the worst-performing asset among the top ten cryptocurrencies by market cap this year.
Despite ADA’s poor performance, the long-term holders have opted to increase their positions rather than sell, indicating their belief in the token’s eventual recovery. Notably, only 18% of ADA addresses are currently “in the money,” which suggests that many holders are underwater on their investments. The number of long-term holder addresses stands at approximately 3.2 million.
In addition to the impressive holding metrics, IntoTheBlock reports stable network activity for Cardano. Since April, the network’s transaction count and active user base have remained consistent, challenging claims that Cardano is a “ghost chain.” The network’s daily on-chain volume of around $7.2 billion further underscores its robustness, with a low Network Value / Daily Transaction Volume (NVT) ratio of 2.62 indicating that ADA might be undervalued at its current price.
However, Cardano’s adoption has seen stagnation compared to previous cycles. The total number of ADA addresses with a balance has remained steady at around 4.45 million for over a year. The focus has shifted towards other networks such as Solana and Ethereum’s layer-2 solutions, which have garnered more user attention. For ADA to experience a significant price surge, an increase in new user adoption is crucial. A surge in new users would introduce fresh capital into the ecosystem, potentially leading to a substantial rally as ADA enters a new phase of price discovery.
August 2024, Cryptoniteuae
