Key Points
- Cardano [ADA] experienced a significant price drop, with a high percentage of holders incurring losses.
- ADA’s weak correlation with Bitcoin and decreasing confidence among whales raise concerns for its future performance.
Cardano [ADA] recently suffered a major blow, losing 13.27% of its value within 24 hours and trading at $0.50.
This significant drop led to an increase in the number of ADA holders incurring losses.
ADA’s Performance and Correlation with Bitcoin
According to data from IntoTheBlock, only 36% of ADA holders were making profits at its current value, while a massive 57% were dealing with unrealized losses.
This situation cannot be solely attributed to the recent decline. Despite the market being in an early bull phase, Cardano has underperformed, raising questions about its ability to help holders break even this cycle.
A key issue is ADA’s correlation with Bitcoin (BTC). While many top altcoins have a strong correlation with BTC, ADA’s price correlation stands at only 0.14, suggesting that Bitcoin’s recovery may not necessarily lead to ADA’s recovery.
Long-term Outlook for ADA
The long-term outlook for ADA appears less promising due to the actions of some whales.
On-chain analysis shows a decline in whales’ balances. For instance, the group holding 1 million to 1 billion tokens have liquidated some of their ADA holdings.
On 15 March, this group held 16.70% of the total supply, but this percentage fell to 16.20% at press time. A similar situation was observed for the group holding 100 million to 1 billion ADA, with their ownership falling from 7.01% to 5.92% within the same period.
Such actions indicate a diminishing confidence in Cardano’s long-term potential. However, the Relative Strength Index (RSI) was 31.76, suggesting that bulls were trying to pull ADA out of the oversold region.
If successful, this bullish attempt could push ADA up to $0.55. But if the bulls lack adequate firepower, ADA might continue to fluctuate between $0.49 and $0.52 in the short term.
Apart from the factors mentioned above, several other elements could influence where ADA moves next. For instance, the price action following Bitcoin’s halving may determine whether the token is worth holding in the long run.
