Cardano’s (ADA) value has soared by 27% over the last week. However, a massive sell-off from ADA investors threatens this surge. More than 120 million ADA, equivalent to over $52.6 million, has been sold off recently, introducing uncertainty to its bullish progress.
Despite a bullish market trend, significant investors and profit-seekers have shown an increasing inclination towards sell-offs—it came as a surprise to many. Speculations are rife about the possible reasons behind these moves. While some blame impending government regulations, others attribute it to natural market volatility. As the uncertainty grows, ADA prices have begun fluctuating dramatically, sending waves of anxieties across the crypto trading world.
A key tool for assessing investor behavior, the Market Value to Realized Value (MVRV) ratio, suggests increasing sell-off pressure.
Cardano’s surge compromised by sell-off
Currently, Cardano’s 30-day MVRV stands at 11%, hinting that profit-making investors might be contemplating selling their stakes. Meanwhile, investors holding between 1 million to 10 million ADA are increasingly offloading their holdings, seemingly strategizing to capitalize on profits.
Historically, an MVRV ratio between 10 and 20%, also known as a “danger zone,” suggests an overvalued market and a likely price decrease. If the ratio spirals above 20%, it usually signals an extremely overvalued market and prompts sell-offs. Market dynamics and investor sentiment undoubtedly play crucial roles in all these scenarios.
If ADA can maintain its price level above $0.42, it might find the necessary support to sustain its onwards rally, potentially establishing a new support floor at $0.45. However, current indications of a bearish pattern may push the price down to $0.40, potentially erasing previous gains. Experts recommend thorough research and professional consultation before making any investment decisions, given the unpredictable nature of market conditions.
