Cardano’s MVRV ratio has flipped negative, indicating that the average buyer is now at a loss. This raises questions about whether HODLers will remain steadfast in their conviction or if market fear, uncertainty, and doubt (FUD) will push them to reconsider their positions. Despite a 12.60% decline in the past month, Cardano (ADA) is still 87% higher than its opening price on election day, outperforming many other high-cap assets. This demonstrates strong holder conviction, with investors choosing to hold onto their gains rather than sell.
However, on-chain fundamentals tell a different story. Cardano’s Total Value Locked (TVL) has fallen below pre-election levels, indicating liquidity outflows. Additionally, the Whale Transaction Count for transactions over $100,000 has hit a cycle low, suggesting reduced institutional activity. If ADA wants to reignite fear of missing out (FOMO) in the market, it needs to confirm support on the charts as weakening fundamentals could cause even long-term holders to reconsider their positions for fear of losing their gains.
As of the recent breakdown on April 6th, ADA lost its $0.58 support level, sparking concerns of a deeper correction. The Market Value to Realized Value (MVRV) ratio flipped negative, indicating that recent buyers are now in a loss position. Despite a rebound to $0.6283, which may have restored some confidence, there is uncertainty whether this is part of a larger market-wide relief rally or if HODLers’ confidence in a bull run is preventing Cardano from erasing its post-election gains.
With each support level breach, ADA holders are faced with a crucial decision – hold firm or exit before further losses occur. If MVRV stays negative and buying pressure weakens, capitulation could be imminent. Without strong fundamentals to support sentiment, the risk of a sell-off to breakeven levels increases. While a surge in trading volume and whale accumulation may provide some bullish signs, caution is warranted as the largest whale cohort remains inactive, and dormant whale circulation is on the rise – signaling potential market tops.
In conclusion, Cardano is facing a critical juncture where holder conviction is being tested amidst weakening on-chain fundamentals. With the MVRV ratio flipped negative and the risk of capitulation looming, ADA’s ability to hold above key support levels will determine its future trajectory. While short-term rebounds and whale accumulation may inject temporary momentum, structural weaknesses in the market could lead to further downside pressure. HODLers must consider whether their faith in ADA’s long-term prospects outweighs the risks of a potential market downturn.
