Hope for the ADA
Like the rest of the cryptocurrency market, Cardano (ADA) has undergone a significant correction in recent days. According to data from Coinmarketcap, the tenth crypto’s market value fell by 23.03% in one month, accelerating its decline by 16.96% in the last seven days.
However, technical analysis experts remain optimistic about the future, as Ali Martinez’s latest post suggests. According to the analyst, the price of ADA could increase by 75% as the MVRV ratio of the token just dropped to -22%. Ali based his reflections on historical data, because the last time ADA fell below -22%, it then rose 75%.
What is the MVRV ratio?
The MVRV (market value to realized value) ratio is an indicator used in the analysis of cryptocurrencies to assess whether they are overvalued or undervalued in relation to their “realized value”. The “market value” is the current price multiplied by the total number of tokens in circulation, while the “realized value” is calculated by taking the price of each unit of the token at the time it was last moved and adding those values together.
Go further: How to read a cryptographic chart?
A negative MVRV indicates that the token’s market value is lower than its realized value, which may indicate undervaluation. In the case of ADA, the MVRV indications clearly show that the asset is undervalued. This is often considered bullish as it may signal an optimal entry point for investors anticipating a market recovery after an oversold period
However, the main limitation of MVRV is that it may not accurately reflect the current state of the market if the tokens have not been actively traded recently and may be affected by the actions of whales who manipulate the market to serve their interests.
Moral of the story: When ADA fails, look to MVRV; he may fall, but he promises to jump!
Disclaimer
Disclaimer: In accordance with The Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to providing accurate and unbiased information, but market conditions may change without notice. Always do your own research and consult with an expert before making any financial decision.