Cardano: Could the ‘primary challenge to Bitcoin’s supremacy’ be approaching its lowest point?
Over the past few months, Cardano’s cryptocurrency ADA has been experiencing a downward trend, dropping almost 60% in value from its year-to-date peak. Nonetheless, recent performance indicators suggest that the bearish momentum might be tapering off. Could this lead to a bullish resurgence in the market for ADA?
As of the present moment, ADA is positioned just outside the top-10 list of cryptocurrencies by market capitalization. This indicates that it still maintains a substantial market cap, implying that a considerable number of investors are holding onto this digital asset with optimistic long-term expectations.
Indeed, ADA appears to be on the brink of a potential bullish surge based on its price movements in recent weeks. Selling pressure seems to be stabilizing, with significant support forming in the vicinity of the $0.31 price level. The altcoin recently revisited this range after slipping down the rankings post-25 August.
The digital asset’s Relative Strength Index (RSI) also signaled a potential turning point at this same price level over the last two days, particularly as selling pressure subsided.
While there remains a chance of further price declines, on-chain data suggests that large investors, known as whales, have been capitalizing on the discounted prices of this altcoin.
Evaluating the degree of accumulation
Recent data from IntoTheBlock indicates that ADA whales currently hold a greater quantity of coins than they did at the height of the 2021 bull market. For example, on 6 September, it was observed that whales possessed 3.2 billion ADA, accounting for 9% of the total available supply.
A broader analysis revealed that during the peak of 2021, whales held approximately 804 million ADA (2.51%). Notably, there was a period of accumulation by whales before the price surged in 2021, with whale balances decreasing as prices escalated.
In recent months, there has been a consistent rise in ADA whale holdings, indicating ongoing accumulation by these large investors during the downtrend. At the last market peak, investors held 8.6 billion ADA, whereas the current number stands at around 7.2 billion ADA.
Meanwhile, retail investors who held 23.16 billion ADA at the previous all-time high now possess over 25.24 billion coins.
Is this an opportune moment to make a purchase? Based on historical data related to profitability, ADA is currently at its lowest profitability level in 2024. Essentially, the majority of ADA holders are experiencing losses at the altcoin’s present price levels.
To elaborate, roughly 3.73 million wallet addresses are currently at a loss, compared to 1.87 million addresses at the beginning of 2024.
Moreover, there are approximately 575,000 addresses that are in profit at the time of writing, while about 176,000 addresses are at the breakeven point.
It is also noteworthy that the founder of Cardano remains actively engaged in the project. In a recent statement, he characterized Cardano as the most significant contender to Bitcoin’s supremacy.