- Recent data reveals a decline in the number of individual addresses holding Cardano’s ADA, suggesting small holders are exiting.
- Despite this shift and a negative MVRV ratio, ADA’s open interest and positive funding rates indicate a persistent bullish sentiment in the market.
A Tectonic Shift in ADA Ownership
In the ever-evolving landscape of cryptocurrency, Cardano’s ADA has recently experienced a notable shift in its ownership dynamics. Data from Santiment, a prominent crypto analytics firm, indicates that the total number of addresses holding ADA has decreased over the past three days, suggesting a significant change in the holder composition of this digital asset.
The Exodus of Small Holders
This decrease in ADA addresses is being interpreted as a sign of smaller investors, often referred to as ‘small holders’, capitulating and selling their holdings to larger investors, commonly known as ‘whales’. This movement implies a transfer of ADA ownership from a larger, more distributed group of holders to fewer, more concentrated entities.
Cardano Holders: Underwater but Hopeful
Despite a recent uptick in ADA‘s value, the broader holder community remains predominantly at a loss. This is evident when examining the Market Value to Realized Value (MVRV) ratio of ADA, a metric that compares the current market price of an asset to the average price at which it was purchased. A negative MVRV ratio, which has been the case for ADA since March 2022, indicates that the asset is undervalued and that most holders would incur losses if they were to sell at the current market price. As of the latest data, ADA‘s MVRV ratio stands at -17.41%, underscoring that the average ADA investor is holding the coin at a loss.
Bullish Trends Amidst Negative Valuations
Despite these challenges, the ADA market is not devoid of optimism. The futures open interest for ADA has almost doubled since November 1st, reaching $206 million. This 63% increase in open interest suggests that investors are actively entering new trading positions, a sign typically regarded as bullish. Furthermore, ADA’s funding rates across exchanges have been positive since the end of October, adding to the bullish sentiment. This combination of rising open interest and positive funding rates paints a picture of an ADA market that is optimistic, despite the current valuation struggles.
As the Cardano ecosystem continues to evolve, these market dynamics underscore the complex interplay between valuation metrics, investor behavior, and broader market sentiment in the cryptocurrency world.