Cardano Investors Take Profits, Signaling Potential Decline
Recent on-chain data reveals that Cardano investors are cashing out their profits at high levels, indicating a possible decline in the near future. According to analytics firm Santiment, altcoins like AAVE, ADA, and CRV have experienced significant profit-taking.
The Profit-to-Loss Ratio Indicator
The key indicator used to measure profit-taking is the “ratio of daily on-chain transaction volume in profit to loss.” This metric compares the volume of profits taken with the volume of losses incurred for a particular cryptocurrency.
By analyzing the on-chain history of sold coins and comparing their previous selling price with their current value, this indicator determines whether a sale contributes to profit or loss volume.
Positive vs. Negative Values
A positive value indicates that profit-taking volume is higher than loss-taking volume at present, while negative values suggest the dominance of loss-taking volume.
Extreme Profit-Taking Impact
Following Bitcoin’s rally above $28,000, Cardano, Aave, and Curve have seen intense profit-taking. Curve has been hit hardest with a nearly 7% drop in price, while Cardano has only declined by 2%. Aave has remained relatively unaffected.
Concerns for Cardano
The fact that even Cardano’s modest recovery rally triggered such extreme profit-taking is concerning. It suggests that some investors were waiting for an opportunity to sell their coins and seized it during the surge. If profit-taking continues in the coming days, Cardano may retrace more of its recovery.
ADA Price Movement
During the recent rally, Cardano reached $0.27 before slipping back to around $0.26.
Hot Take: Potential Correction Ahead for Cardano
The surge in profit-taking among Cardano investors indicates a possible decline in the asset’s value. Despite holding onto some of its recoveries, Cardano’s modest rally has triggered a significant market reaction. This suggests that investors were eagerly waiting for an opportunity to sell their coins. If profit-taking continues, Cardano may retrace more of its recovery. It will be crucial to monitor the market in the coming days to see how this trend unfolds.
By
By
By
By
By